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Modi's offer to Tata: Rs 9,570-cr soft loan

Nov 12, 2008 12:45 PM IST Business Business

Ahmedabad: Gujarat Chief Minister Narendra Modi has given the Tata Motors a deal it will never forget. A deal that convinced the auto giant to choose Gujarat over other states as the site for the Tata Nano plant.

The biggest incentive was a Rs 9,570 crore soft loan over 20 years — close to 25 per cent of Gujarat's annual budget.

Tata Motors will repay the loan in 20 years, at 0.1 per cent interest rate and will repay the land price in eight equal annual installments.

The government will also provide a four-lane road connectivity and also exempt Tatas from electricity duty, registration and transfer charges of land.

It will also put up a waste disposal plant, supply natural gas through a pipeline and provide 100 acres near Ahmedabad for a township.

This is the deal that the Gujarat government did not want to make public. Despite several RTI applications, the government said it was classified information, as it contained trade secrets of Tata Motors.

But now details of the deal, in the form of a Cabinet note by Industries Department Deputy Secretary Shobhna Desai, have been leaked out.

An embarrassed CMO of the Industries Department has initiated an internal inquiry to find out how the details of the deal went public, but nobody is willing to speak on the matter.

The Congress party in Gujarat says the soft loan adds up to a loss of Rs 30,000 crores for the state and even alleges corrupt practices in the whole deal.

Congress leader Arjun Modhvadia says, "It appears that there have been kickbacks by a few people in this deal. We want to know what the real deal is behind the deal."

The Industries Department has been asked to inquire into how the document got leaked. Meanwhile, work on the mother plant of the Nano has begun in full swing at Sanand.

(With inputs from Gaurav Shah)