Talks have been held in the eastern Indian city of Calcutta to try to end a dispute over the building of the world's cheapest car, the Tata Nano.
The state governor called meetings with government and opposition "fruitful". More negotiations are due on Saturday.
Tata Motors suspended work at the plant in West Bengal state on Tuesday after protests over the acquisition of land from farmers and opposition parties.
The company has said it would consider relocating the car plant.
The conflict has already led to loss of life.
A few hours after Tata announced its plans to suspend work at its car factory, a villager there allegedly committed suicide fearing loss of work for his sons.
And at least six small farmers had earlier killed themselves in Singur when their land was acquired for the Tata project.
Compensation
The BBC's Subir Bhaumik in Calcutta says Tata bosses are not taking part in the discussions, arguing the crisis is political and they have no role in it.
Exclusive look at the Tata Nano
After Friday's negotiations Governor Gopal Krishna Gandhi said: "The talks were fruitful and constructive - it helped both sides understand each other much better. We will meet for talks again on Saturday."
The leader of the opposition in the West Bengal assembly, Partho Chattopadhyay, also called the talks "fruitful".
"But we cannot talk of a solution now. We need more discussions."
The state government said it had made several proposals and was waiting for the opposition to respond.
Opposition supporters have been protesting for a fortnight at the Tata plant in Singur - some 50km (31 miles) north of Calcutta - demanding that 400 acres of requisitioned land be returned to local farmers.
The communist-led state government says that is not going to happen.
Over the last few days there have been protests in Calcutta in support of the Tatas.
The West Bengal business community fears that if Tata leaves, few will want to invest in the state, which is one of India's poorest.
Tata Motors chairman Rata Tata said on Thursday that the company was doing everything possible to launch the Nano on time but it all depended on what happened in Singur.
He had earlier indicated the car, expected to cost 100,000 Indian rupees ($2,500), would be launched in October.
Our correspondent says the state government - which acquired the land for Tata - appears to be ready to offer improved compensation to the farmers.
If that offer is turned down, the world's cheapest car may have to be built somewhere else.
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