Tata Motors [Get Quote], which has already started interim production of the Nano car from Pantnagar in Uttarakhand, is planning to set up a small permanent production unit of the world's cheapest car in the industrial town.

"Tata Motors officials have conveyed to us that they are thinking of setting up a small permanent production unit of Nano in Pantnagar," Chief Secretary I K Pande said.

Although Tata Motors decided to set up the Nano mother plant at Sanand, Gujarat, its interim production has already started in Pantnagar, where the auto major produces Ace mini trucks.

However, Pande added the company officials have not yet indicated whether they would set up a new unit or convert the interim unit into a permanent production facility for the Nano.

When contacted, the Tata Motors spokesperson said, "It is Tata Motors's view that, even after the mother plant at Sanand becomes operational, Tata Motors will continue to manufacture a certain volume of the Nano at Pantnagar. We do not have any other information to share."

The Sanand plant will have the capacity to produce 2.5 lakh cars initially, expandable up to 5 lakh cars.

Pande further added that the state cabinet had approved a decision to provide lease rent concession to Tata Motors for the 1,000 acres of land where the company is making Ace trucks. "Tata Motors will pay the lease rent for 1,000 acres of land at the rate of Re 1 per square metre," he said, adding the lease rent concession was being provided to the company as it has set up a mega project in the hill state.

Following the approval of the proposal, Tata Motors will get a concession of Rs 1.5 crore (Rs 150 million) per annum in the lease rent, he said. Normally, industries are charged lease rent at the rate of Rs 5 per sq mt, he added.

Pande said the company officials have given an assurance to set up a depot and sell 80 per cent of vehicles from Uttarakhand, so that the hill state would earn a revenue of Rs 200 crore (Rs 2 billion) per annum as VAT and other taxes.

Tata Motors' shifted its ultra-cheap Nana car project to Sanand, Gujarat following protests by farmers led by opposition leader Mamata Banerjee.

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