A LETTER leaked by Lord Mandelson, demanding face-to-face talks with Jaguar Land Rover’s Indian owners, is at the centre of a row between the two sides.

The business secretary and Tata Motors have been locked in negotiations for months over a crucial government loan guarantee to the loss-making car manufacturer.

But the Indian firm is reportedly furious after details of private correspondence from Lord Mandelson addressed to them appeared in a Midlands newspaper.

The leak has caused a near-total breakdown in trust between the two parties, who were closer to an agreement than at any stage over the last three months.

The letter, dated July 16, reveals Lord Mandelson’s increasing frustration with Tata.

He said: “I am concerned at the lack of pace on the Tata side in considering the negotiations on possible UK Government support to Jaguar Land Rover.

“I would ask you to urge your colleagues at Tata Motors to respond to our revised team sheet that was sent to Ravi Kant on July 7 as soon as possible.

“It would be helpful if a representative from the company, with appropriate authority, is available in the UK from early next week to conduct face-to-face negotiations, so we can reach a conclusion as soon as possible.”

The comments appeared just days after Lord Mandelson went on Sky TV calling on the company to “quicken the pace” of talks over a guarantee to the £340m European Investment Bank loan first unveiled in early April.

But a source close to the negotiations said: “Quite simply, the Government appears to be on a different planet. Relations are frosty – the talks have been disrupted by the Government’s decision to leak details of what has been going on because it has undermined trust.

“It was bad enough Mandelson going on TV after doing nothing for 10 months and saying Tata had to hurry up but to then see private correspondence leaked – how can you trust these people?

“The Government are at risk of destroying these whole discussions. This has shaken Tata’s confidence. The Government has asked Tata not to negotiate in public and they stood by that, but Mandelson has not.”“Only one party in these discussions has been dragging its feet and that is the Government.”

Whitehall has already indicated it is only willing to pledge guarantees of £175m of the £340m on offer from the EIB, and JLR may now have to seek other avenues of finance to help stem losses.