Back to the future? Investment has remained a hurdle for West Bengal

As symbolism goes, the meeting between West Bengal Chief Minister Mamata Banerjee and Tata group Chairman N Chandrasekaran could not have been more significant. Seventeen years ago, Ms Banerjee made the Tata group’s signature Nano plant in Singur the focus of her campaign to oust the Left Front from its more than three-decade rule in the state. Her high-decibel crusade, centred on defending the rights of those who had been unwilling to sell land for the project, worked. The group exited Singur in 2008 and relocated to Sanand, Gujarat, when Narendra Modi was chief minister there, with then group chairman Ratan Tata making elliptical allusions to “Good M and Bad M”. Behind the optics of the newfound bonhomie with his successor is a hard reality. State elections loom in less than a year. With the Bharatiya Janata Party having made inroads into Trinamool strongholds, the lack of meaningful investment in the state is becoming glaringly evident even as nearby Odisha, Telangana, and Andhra Pradesh surge.

 

Mr Chandrasekaran and Ms Banerjee reportedly discussed private-public partnerships in the context of economic growth in the state. The irony of this visible reset in relations is hard to ignore. Ms Banerjee’s campaign against the Tata plant and a petrochemicals hub in Nandigram with Indonesia’s Salim Group —the biggest foreign direct investment project in the state at the time — helped propel her party to power. But her regime has proven singularly unsuccessful in attracting employment-generating manufacturing investment. Instead, groups that had large investment plans in the state under the Left Front’s belatedly reformed industrial policy — JSW Steel, Videocon, and the Salim group — exited. Borrowing from her predecessor’s playbook, Ms Banerjee has regularly made high-profile visits to places such as the United Kingdom and other European countries, and Singapore, to drum up investment for her state. But West Bengal’s share of foreign direct investment has been less than 1 per cent.

 

Annual “Global Business Summits” yielded extravagant praise from business people but with little to show for it. Infosys and Wipro have back offices on the outskirts of Kolkata, and Reliance Industries has claimed to have invested over ₹50,000 crore in digital services and retail businesses in the state between 2016 and 2025. Tata Consultancy Services, too, has a large presence, employing 54,000 people across multiple locations in the state, including a proposed investment in an upcoming tech centre, and the group’s construction-machinery plant in Kharagpur is one of Asia’s largest. But this investment has not transformed the state into, say, tomorrow’s Karnataka or Gujarat. In fact, a parliamentary reply in December last year revealed the startling fact that 2,227 companies, 39 of them listed on the stock exchanges, relocated their registered offices out of West Bengal to other states between 2019 and 2024.

 

To become a genuine game changer, Ms Banerjee needs to transform the dynamics of the state’s investment culture. Her inability to rein in burgeoning political violence, including disturbing reports of her government’s anodyne response to rapes, work-to-rule unions and Ms Banerjee’s own idiosyncratic style are not reassuring for stability-seeking investors. Her refusal to adopt new labour codes that ease hire-and-fire norms — a longstanding industry demand — and standardise compensation is hardly helpful. Mr Chandrasekaran’s visit could signal a genuine intention to reform. How radically and rapidly she can do that will be a test of her mettle.