Why Tata Motors Shares Are Climbing Today

Tata Motors’ share price jumped back in the green on Tuesday morning going up over 2%.

What Happened: The Tata Group company on Monday evening announced that it has successfully secured an arbitration award of ₹766 crore from the West Bengal Industrial Development Corp. Ltd (WBIDC), the state’s industrial development agency.

This marks the resolution of a long-standing dispute related to Tata Motors’ Singur plant, which was shut down in 2008 due to protests against land acquisition. The Singur plant was originally intended to manufacture the Nano model, which was promoted as the world’s cheapest car.

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The arbitral tribunal has also directed WBIDC to pay interest on the awarded amount at an 11% rate, starting from September 2016 and continuing until the actual recovery of the funds. Tata Motors issued a statement regarding the arbitration outcome, stating, “The pending arbitral proceedings before a three-member arbitral tribunal have now been finally disposed of by a unanimous award in favour of Tata Motors Ltd.”

The dispute originated in the early 2000s when the West Bengal government, then led by the Left Front, announced its plans to acquire 1,000 acres of fertile farmland in Singur for the construction of a car factory for Tata Motors. The government argued that the factory would create jobs and stimulate the local economy.

However, the land acquisition faced resistance from many local farmers and political leaders, including Mamata Banerjee of the Trinamool Congress. They contended that the nearly 6,000 displaced families were not adequately compensated.

Price Action: Tata Motors’ share price was up 1.85% to trade at ₹640.15 as the markets opened on Tuesday

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