West Bengal could be the Bharatiya Janata Party’s real test case of its business-friendly policies, points out Kanika Datta.
IMAGE: Union Home Minister Amit Shah with West Bengal Chief Minister Suvendu Adhikari performs the bhoomi poojanfor the new administrative building at Frontier Headquarters in Siliguri, August 21, 2026. Photograph: @SSB_INDIA X/ANI Photo
Key Points
- West Bengal hopes a large project can revive its investment reputation, but a big-bang approach carries significant risks.
- Haldia Petrochemicals highlights decades of delays, ownership disputes, strategic exits and limited broader industrial transformation.
- Past foreign investment efforts also exposed weaknesses in investor scrutiny, worker protection and government decision-making.
- Singur and Nandigram demonstrated how fragmented landholdings can complicate mega-project acquisitions and trigger fierce political protests.
- West Bengal could become the Bharatiya Janata Party’s real test case for its business-friendly economic policies.
West Bengal’s new government is hoping for a large project to transform its fortunes. As a one-shot solution for the state’s languishing reputation as an investment destination, the ambition is understandable.
But there are many variables in the big-bang approach that even a state government politically aligned with the Central regime may find challenging.
The state’s history with such projects and its experience in attracting foreign direct investment over the past half century have been uneven even before Mamata Banerjee ousted the Tata Nano project from Singur and stalled a petrochemicals complex at Nandigram.
Many of the problems stemmed from the Left Front’s traditional political constituencies and ideology as much as from its inexperience in handling corporate issues.
The current government, with its antecedents in an ostensibly business-friendly political party, could well have a better handle on laying out the red carpet and untangling regulatory knots for prospective investors.
This may, however, require immersive training of the state leadership, since many stalwarts in the government are disgruntled apparatchiks of the Trinamool Congress, which stormed to power on an anti-investment platform.
The current chief minister, elected from Nandigram, is a prominent example.
Nothing illustrates the pitfalls of big projects better than Haldia Petrochemicals. Announced in 1985 as a Rs 3,600 crore joint venture, this was pitched as the Left Front’s investment showcase.
Calcutta-based industrialist R P Goenka, known to be close to Left Front leaders, was the chosen partner who ‘answered the call’ (as a Business Standard report of the time phrased it).
Nothing much happened after that euphoric moment; rumours did the rounds that perhaps the Goenka group, then in the throes of taking over many companies, lacked the deep pockets for a project of this magnitude.
By 1993, the Tata group had become a partner with the West Bengal Industrial Development Corporation (WBIDC).
A year later, a little-known New York-based industrialist and George Soros associate called Purnendu Chatterjee signed on — allegedly at then chief minister Jyoti Basu’s request.
It took another three years for work on the project to get started and another four years for commercial production to begin — that is, 16 years after the project was announced.
Shortly after, the Tata group decided that petrochemicals was not of strategic interest and exited, selling its shares to WBIDC.
Then followed a fiendishly complicated, 10-year battle for control between Purnendu Chatterjee’s TCG group and WBIDC.
This battle involved share transfer valuation disputes, mutual accusations of malfeasance and the state government’s attempts to sell its stake to Indian Oil Corporation.
The matter wound through the erstwhile Company Law Board. A reference to the Board of Industrial and Financial Reconstruction loomed as losses mounted in 2013 but was avoided.
Then, suddenly, the TCG group secured full shareholding and management control by 2015. This was the result, it is said, of a meeting between Mr Chatterjee and Mamata Banerjee in New York, ending a 30-year saga of poor planning and bad faith.
But this mega-project has hardly transformed West Bengal in a meaningful way. Although it has undoubtedly created a downstream footprint of plastic and polymer factories, Gujarat, Rajasthan, Tamil Nadu and Telangana remain the leaders in this business.
The jute mill investment that went badly wrong
The Left Front’s early manful attempts with foreign investment ended in disaster. This was the acquisition by a football club owner of a bunch of ailing jute mills owned partly by a local group but registered in Scotland (a Raj legacy if there ever was one).
There was some puzzlement. Jute was considered a moribund industry then, so what did this entrepreneur, R G Brealey, want them for?
Despite the doubts, Brealey, then owner of British club Sheffield United, was hailed as the saviour. But his foray ended with heavy losses, unpaid dues, worker suicides and criminal cases against him.
It turned out that Brealey had no viable turnaround plans as such. He sought to use these mills as part of a Back to Basics adventure training school based in a remote Scottish estate for disadvantaged British inner city youth.
They would be trained and sent to work in those jute mills. Curiously, the state government feted without bothering to properly investigate an investor who ended up harming the very people the Left purportedly champions — workers.
Ironically, it was workers’ unions, including those controlled by the Left Front, that stalled early privatisation attempts.
This was the proposed sale of the storied Great Eastern Hotel to the Accor Pacific group, which fell through because unions feared layoffs and lower pay.
It failed again in 2001 — this time to Lalit Suri’s Bharat Hotels — for the same reason.
Four years later, Great Eastern was acquired by the same group for a mysteriously low price of Rs 52 crore — but only after the state government underwrote generous voluntary retirement schemes.
As for Singur and Nandigram, those became victims of the Left Front’s land redistribution policy — the one that kept it in power for over three decades — under which landholding fragmented into tiny plots that complicated attempts to acquire large plots for mega-projects.
It also created the chicken-and-egg situation for the government, with land losers in this population-dense but economically challenged state unable to find alternative means of livelihood.
It is unclear yet how the new right-wing government plans to approach this issue without precipitating the same kind of fierce protests.
If anything, West Bengal could be the Bharatiya Janata Party’s real test case of its business-friendly policies.
Feature Presentation: Aslam Hunani/Rediff
