Indian authorities deployed 3,000 police at Tata Motors Ltd.’s plant in West Bengal as protesters defied a threat from group chairman Ratan Tata to scrap the factory for its $2,500 Nano car unless demonstrations ended.

At least 500 people are camped outside the site in Singur in the eastern state of West Bengal, Priyabrata Baxi, the officer-in-charge at the local police station, said in a telephone interview today. About 30,000 people demonstrated outside the factory yesterday.

Ratan Tata said on Aug. 22 he may relocate the plant to protect employees from violent protests, jeopardizing a 15 billion rupee ($344 million) investment. Delays in completing the factory may upset Tata Motors’ plan to introduce the Nano in the last quarter of this year and increase the project cost.

The Trinamool Congress, an Indian political party leading the protest, is demanding that 400 acres (162 hectares) of land is returned to farmers, The Times of India reported today, citing leader Mamata Banerjee.

“They are sitting there in their camps and shouting slogans,” Baxi said. Tata Motors’ spokesman Debasis Ray was not available for comment.

Tata Motors gained 1.5 percent to 433.7 rupees at the close of trading in Mumbai. The stock has fallen 42 percent this year.

Amar Singh, leader of the Samajwadi Party, attended yesterday’s rally outside the plant, the Business Standard newspaper reported. Amar Singh’s party helped Prime Minister Manmohan Singh’s government win a confidence vote in July after communist parties withdrew support.

West Bengal Chief Minister Buddhadeb Bhattacharjee is willing to meet Banerjee to discuss the issues raised by her party, the Press Trust of India said, citing comments made by the chief minister during a press conference in Kolkata.

Tata Motors, which bought the Jaguar and Land Rover luxury units from Ford Motor Co. for about $2.4 billion in June, is betting that its ultra-low priced Nano will entice first-time car buyers in the nation where more than 45 million people use motorcycles.

The 623-cc Nano is crucial for Tata Motors, India’s biggest truck maker, to boost sales as seven-year-high interest rates and the fastest inflation in more than 16 years damp demand for vehicles in India. Tata’s sales fell 8.9 percent in July, while car sales in India dropped 1.7 percent, the first monthly decline since November 2005.