(Recasts with clashes)

By Bappa Majumdar

NANDIGRAM, India, March 15 (Reuters) - Baton-wielding police fired tear gas and beat dozens of villagers on Thursday who were protesting the killing of at least 14 people in a dispute over plans to set up an industrial hub on farm land.

The killings were the worst violence yet over communist-run West Bengal's plans to acquire land for a low-tax Special Economic Zone (SEZ) at Nandigram, a dispute that has also undermined the national government's economic reform plans.

At least 2,000 protesters, most of them farmers and opposition activists, set fire to a government building in Nandigram, witnesses and police said.

Apparently in retaliation, police fired tear gas near a hospital emergency ward, sending hundreds of villagers, who had assembled at the hospital to look for missing relatives from the previous day, scurrying for cover.

Villagers jumped into ponds and ran into paddy fields as some shouted: "They will kill us again. Run for your life, brothers."

Elsewhere, women and children wailed as they sat along narrow mud roads, their homes ransacked, reportedly by communist supporters.

The clashes erupted a day after police fired on farmers who had attacked officers as they tried to enter an area earmarked for a chemical industry hub with investment from an Indonesian conglomerate, the Salim Group.

Police said they have taken control of at least five of the 12 troubled farming areas in Nandigram, 150 km (90 miles) southwest of Kolkata.

But protests have spread.

In Kolkata, students boycotted classes, trains were stopped by demonstrators outside the city and roads were blocked.

India's houses of parliament were adjourned for an hour because of protests by legislators over the killings, and opposition lawmakers said the ruling communists in West Bengal were responsible for the deaths.

REFORMS IN TROUBLE

Previous clashes over the proposed SEZ since January have killed at least seven people and led to the government putting more than 230 SEZ proposals across India on hold.

Nandigram had been a no-go area for authorities for the past two months as villagers set up road blocks to stop police entering.

The violence has been an embarrassment for the communists in West Bengal, who have annoyed grassroots supporters by pressing for SEZs as part of their reform program.

The unrest has also proved a serious challenge for Prime Minister Manmohan Singh, who is under pressure to tone down reforms after signs of voter discontent with the ruling Congress party.

Supporters of the state government, many waving red flags, entered several villages in Nandigram on Thursday with police. They blamed Maoist guerrillas for inciting the violence.

Nandigram is fast becoming a lightning rod for criticism of the government's economic reforms, with some evidence that it has emboldened other protesters in India.

Major industrial projects in the neighbouring state of Orissa have also been stalled by farmers unwilling to give up land. Among them is a high-profile $12 billion plant by South Korean steelmaker POSCO Co. Ltd., which would be India's largest foreign investment.

Last week at least 50 people were injured near the proposed POSCO site during clashes.

Trinamul Congress, the main opposition party in West Bengal, called a strike for Friday to protest against the killings.

For many it was all too late as rumours added to the fear and uncertainty.

"I'm told many children were slaughtered and their bodies dumped into the river," said a sobbing Kavita Das Adhikari, 30, who was homeless and was trying to find her brother-in-law. (Additional reporting by Surojit Gupta in New Delhi)

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