While confirming to The Financial Express, offical sources however refused to divulge further details on the reasons for abandoning the proposal. However, industry sources pointed out the reason could be M&M's latest move to acquire 51 per cent stake in HMT tractor division.

However, senior state government officials have expressed ignorance on the issue. "We have offered concessions to the proposed project and also identified three alternative sites for the purpose," they said.

Earlier, M&M had identified and proposed to set up a manufacturing facility at Parwada in Vishakapatnam to cater to the markets of south-east Asian countries. The company had intended to produce tractors ranging 28 hp to 50 hp at the plant.

After acquiring HMT's tractors division, M&M will have a huge productionfacility in Pinjore in MP and value-added facilities like speciality model tractors being assembled in Hyderabad for coastal areas. This is expected to enable the company to compete with Eicher, Tafe and Escorts on the same footing.

HMT has an assembly plant in Hyderabad, which was started in 1992 with an annual capacity of 1,000 tractors and also the facility to make special tractors for coastal aplication water areas. HMT also has another assembly plant in Mohali, Punjab, with a capacity of 2500 tractors annually.