It was due to be launched in October and will be ready "this year", Tata said.

"Taking all things into account, mainly the wellbeing of our employees, the safety of our contractors and in fact our vendors also, we've taken the very regretful decision to move the Nano project out of West Bengal," he said.

Other sites

Tata Motors, the country's leading vehicle maker, had already started looking for other sites at which to build the Nano.

"We will have to make the best of the deadline that we have," Tata said.

"We are going to do everything possible to come close to the deadline we had established."

"This is a black day for Bengal. We will have so much more difficulty getting investments now"

Nirupam Senthe, state industry minister

The West Bengal government acquired 1,000 acres of land for the Nano project in 2006.

At least 10,000 farmers accepted compensation for their land, but approximately 2,000 of them rejected it as inadequate and demanded 400 acres of land be returned.

During the protests, Tata's engineers and workers were attacked, prompting the group to stop work.

"This is what happens when you seize land, when you use force," Becharam Manna, a leader of Singur's protesting farmers, said.

"Blame the state government for the Tata decision."

Tata said the firm had not decided where to build the Nano but was examining offers of sites from three or four states, adding that the Nano will be built "within this year".

'Congenial environment'

"We hope we would be able to find a location that has a congenial environment," Tata said.

"All these issues we will announce in the next few days when we have a clearer picture."

Tata was speaking after meeting Buddhadev Bhattacharya, the West Bengal chief minister and his colleagues.

"This is a black day for Bengal. We will have so much more difficulty getting investments now," said Nirupam Senthe, the state's industry minister.

Tata currently controls more than half of India's truck market and nearly 20 per cent of its passenger car market, and is keen to expand beyond Asia.

The company, India's third-biggest carmaker, had planned to make 250,000 cars a year at the Singur plant in West Bengal, with plans to increase production to 350,000.

The dispute in West Bengal highlights a wider problem between India's growing industry.

It needs land but farmers are unwilling to surrender land in a country where two-thirds of the population depend on agriculture for a living.