India Inc wants land acquisition norms diluted

In the last of a two-part series, Business Standard looks at the changes the business community wants in the new legislation

When Sajjan Jindal, chairman of JSW Group, walked into Nandagaon in Maharashtra on September 15 to scout for land for a port project, he was in for a surprise. Over 100 villagers stopped his car and made him write an undertaking that he would not set up the port project which was threatening their livelihood and homes.

Jindal was planning to set up an all-weather Rs 10,000-crore port project and with local villagers now opposing the project, it will be a long way ahead for JSW to acquire land for the project.

The land Bill, approved by Parliament, has made lives of entrepreneurs like Jindals more difficult.

India Inc leaders say it's time the government listened to their suggestions to dilute the norms, especially with regard to 80 per cent consent required from land owners and on increased compensation.

But with general elections coming, chief executive officers (CEOs) also warn it will be difficult to expect any change in norms for the next one year till a new government is firmly in saddle. "Getting 80 per cent of land owners to sell land will be next to impossible - especially as it is difficult to trace up to 15 per cent landowners in any patch of land," says the CEO of a real estate company.

CEOs of the infrastructure sector say many projects across India are stalled as land clearances are still not in place. Vedanta had to abandon its bauxite mining project in Lanjigarh, Odisha, as local tribals refused to part ways with land.

The new land Bill will spur public-private partnership (PPP) projects as only 70 per cent of land owners' consent is required for PPP projects. The new land Bill will also encourage leasing of land instead of buying directly from farmers, say corporate lawyers.

Another issue which is worrying CEOs is the return of land if a project fails to take off in five years. This provision, CEOs say, is unnecessary as many a time a project fails to takes off for reasons not in control of a company. This could be not getting permission from the government, to lack of environmental clearances, litigation and/or a change in the economic conditions.

"We advise the government to do away with this condition to return land in five years," says Ajit Gulabchand, chairman and managing director of a construction firm.

According to the new Bill, the definition of "public purpose" is restricted to acquisition of land for strategic purposes vital to the state, and for "infrastructure projects" and no consent is required in cases where the land is being acquired by the government for public purpose projects or for its own use (including public sector undertakings/corporations) in areas such as defence, railways, highways, ports, power, irrigation, housing for the poor, then such a consent is not required.

India Inc wants same provisions for similar projects undertaken by the private companies also.

Finally, as the higher compensation clause under the land Bill will make any projects expensive, CEOs say the compensation should be reduced so that project can be made viable.

Larsen & Toubro officials estimate that project cost of Navi Mumbai will go up Rs 4,500 crore with the compensation clause of the new land Bill.

But the big question now is: Is the government listening?

BONE OF CONTENTION
India Inc's opposition to land Act provisions

Conflict clause: 80% consent required from landowners
Why: Difficult to trace up to 15% landowners in most cases

Conflict clause: Increased compensation
Why: Will inflate land prices and make projects costlier
Conflict clause: 5-year deadline to start project or return land
Why: Several projects are grounded due to reasons beyond the company