New Delhi - Work at the Tata Motors factory in eastern India that is producing the world's cheapest car, the Nano, came to a standstill on Friday after the company's employees were threatened by demonstrators demanding return of farmland acquired for the project.

Thousands of farmers and political activists have laid a siege around the factory in Singur near West Bengal's state capital Kolkata since Sunday.

Tata officials said employees and officials who were leaving the factory premises after work on Thursday night were surrounded and "intimidated" by a mob telling them not to report for work on Friday.

"Due to the problems encountered on Thursday night the company (Tata) has decided that there would be no attendance at the project site during any of the shifts on Friday," said a Tata Motors spokesman.

The factory, operated by Tata, among India's biggest industrial houses, resembled a fortress with as nearly 3,000 policemen have been deployed by West Bengal government for the demonstration led by the state opposition leader Mamata Bannerjee.

Groups of farmers in Singur allege that some farmland for the plant has been forcibly acquired by the communist-ruled state and given to the company. They are demanding that Tata return 160 of the 403 hectares allotted for the factory to the farmers.

But Tata argues that the land is required to set up units for spare parts and component vendors and shifting them would make it difficult to keep the costs of the auto low.

Tata owner, Ratan Tata, has already threatened to withdraw the project from the state if agitation continued.

Tata, India's leading vehicle maker, has invested over 375 million dollars in the plant at Singur. The first Nano cars, priced at nearly 2,400 dollars a unit, were scheduled to roll out in October.

Industry experts said the halt in operations at the Singur plant would only delay the launch of the Nano, dubbed the "People's Car," which has captured attention worldwide.

Tata officials, worried over the delays caused by the agitation are seriously considering relocating the plant from West Bengal and are reported to be holding negotiations with other state governments in this connection. (dpa)