The massive investment plans announced by the Tata Group in Bangladesh may become a reality, if the new government — which would be formed after January 2007 elections — approve the recommendations of a group of secretaries set up to look into the proposal.

According Indian wire agency PTI, the group of secretaries has recommended that the proposals can be given the final go ahead. The Tata Group has so far not responded to these reports.

The Tata Group had proposed large investments worth a total of $3 billion in Bangladesh, which – if implemented – would be the biggest ever-foreign investment in that country.

The proposed investments have the potential to boost Bangladesh''s GDP growth by more than a per cent in a year, according to some independent estimates.

The Tata projects would also have significantly reduced Bangladesh''s trade deficit with India as much of the steel, power and fertiliser output would be sold in India.

Among the Tata group companies, Tata Steel had proposed to set up a 2.4- million tonnes per annum steel plant while Tata Chemicals had planned a 1- million tonne urea plant. Tata Power had proposed to build a 1,000 MW gas fired power plant and possibly another 500 MW-coal fired plant.

These investments were proposed by the Tata group in return for assured supplies of low-priced natural gas. However, negotiations with the Bangladesh government hit a rough patch over the pricing of gas. There was some opposition from local business groups over the favourable treatment to Tatas.

These differences were settled after the Tata Group agreed to a higher price for gas and raised the aggregate investments to $3 billion. By then, the country had entered the pre-election period and the government did not want to decide on such a high profile case. Hence, early this year, the Tata group had announced that its investment plans in Bangladesh have been suspended for the time being because of unacceptable delays in getting government approvals.