The industrial zone is to be built in West Bengal state with help from Indonesian conglomerate the Salim Group, but the project has faced opposition from farmers refusing to give up their land.

The violence erupted in Nandigram, about 150 km north of Kolkata, capital of the communist-ruled state, which has been wooing domestic and foreign investors over the past few years.

"At least two persons are dead, but there are rumours of more people killed which we are verifying," Ashok Dutta, a senior police official told Reuters.

Anger has simmered among Nandigram's farmers, but on Sunday tensions boiled over as villagers and supporters of opposition parties clashed with communist cadres.