NEW DELHI (AP) -- Tata Motors halted work Friday at a factory manufacturing the world's cheapest car in eastern India as thousands of angry farmers protested outside for compensation for their land, a company official said.
The move cast further doubt on the production of the US$2,500 Nano, set to go on sale by the end of 2008. Tata announced the Nano earlier this year as a vehicle that would empower India's poor.
The company acquired 997 acres (403 hectares) in West Bengal state to build its plant on, but the project has drawn significant opposition from local farmers who say they haven't received proper compensation for their land and opposition politicians who accuse the company of taking advantage of the rural poor.
The protests, which began in Dec. 2006, have intensified recently. Opposition politicians have for nearly a week been organizing a blockade of the highway that runs past the factory, setting up tents and stages and holding daily rallies.
Protesters won an apparent victory Friday when, for the first time, Tata officials told its roughly 5,500 employees and contractors not to come to work.
"We decided our colleagues will not report to work. We want to take stock of the situation at the site in light of the blockades and decide what to do about tomorrow," Tata Motors spokesman Debasis Ray said. "We are responsible for the safety of everyone working at the site."
Last week, Ratan Tata, chairman of Tata Group, threatened to move the factory out of West Bengal if the protests continued.
Tata has the support of the communist government that has ruled West Bengal for three decades, but a coalition of opposition parties has fought the project because it opposes using fertile farmland for industry.
How the land was acquired has been a contentious issue, with state officials insisting most people willingly sold out. Farmers and opposition politicians say many were pressured by police and officials into selling at below-market rates.
Mamta Banjeree, chief of the opposition Trinamool Congress party, which has led the fight against Tata, has demanded Tata return 400 acres (161 hectares) to the farmers, and on Friday he vowed to press on with the blockade.
"I will not relent till our demand of land return is met," said Banerjee, according to the Press Trust of India news agency. "Otherwise our movement will be intensified. ... Our commitment is to the people, not to an industrialist."
West Bengal has been the center of a national debate about acquiring farmland for factories in India, where about two-thirds of the more than 1 billion people live off agriculture.
The controversy came to a head last year when police gunned down 14 protesters in Nandigram, a nearby district in West Bengal, causing an outcry that eventually scuttled a planned special economic zone designed to draw foreign investment.