New Delhi  - India's Tata Motors Tuesday announced that it was relocating its project to manufacture the world's cheapest car, the Nano, to the western state of Gujarat and will launch the car in the first quarter of 2009.

The company last week scrapped its 350-million-dollar project in the eastern state of West Bengal after continuing protests by farmers over land acquired for the plant.

Tata group chairman Ratan Tata and Gujarat chief minister Narendra Modi announced at a press conference that the new Nano plant would be located on 440 hectares in the Sanand area near the commercial capital Ahmedabad.

The plant, having an initial capacity of 250,000 units annually, would be expanded in subsequent phases to up to 500,000 units per year, Tata Motors said.

"The site in Gujarat will help Tata Motors establish a new dedicated mother plant with the shortest possible time lag and least possible incremental project cost," Tata told reporters in Ahmedabad.

"We have been through some sad experiences... but so quickly and with so much enthusiasm we now have a new home," he said.

Tata Motors, which had earlier planned to launch the Nano by the end of October, will explore the possibility of building the car from two different locations.

"While awaiting the Sanand plant's completion, Tata Motors will explore the possibility of manufacturing the Nano at its existing facilities at Pune and Pantnagar and launch the car in the last quarter of this financial year," Tata Motors' statement said. The Indian financial year begins on April 1.

Ratan Tata said the company would endeavour to shift the equipment and roll out the Nano from Gujarat at the earliest possible.

"It would be too premature to talk about when Nano will roll out of Gujarat," he said declining to give specific dates.

Tata Motors had begun scouting for an alternative site after pulling their project from the Singur plant near the West Bengal state capital Kolkata on Friday.

The company which had planned to make 250,000 units annually at Singur said it was abandoning the project owing to continued unrest and because it feared for the safety of its employees.

The state opposition Trinamool Congress party had led a forum of farmers and laid a siege to the Singur plant since August 24, demanding that half of the land, that had been acquired from farmers against their will, should be returned.

In early September, Tata Motors suspended work at the plant because of the protests, saying its employees felt threatened and later warned that it might relocate the project to another state.

The Nano, dubbed the "People's Car," costs around 100,000 rupees (2,130 dollars) and was unveiled with much fanfare at a car show in New Delhi in January. (dpa)