MP's new land allotment rules likely to jack up rates

After almost three years of the launch of the Industrial Promotion Policy 2004, parleys will begin on January 18 for amending land allotment rules for industry.

The Land Allotment Rules, 1974, were amended in 1999. Since then industrialists, particularly small and medium entrepreneurs (SMEs) have demanded more flexibility like less government interference.

Further, the industries want land allotment rules and lease rules defined separately since a number of cases are in court due to definitional issues.

"Industry needs immediate change in land allotment rules and less interference from the government on land-related issues. An amendment to the Rules was promised in Industry Policy 2004 but discussions are still pending," R S Goswami, president, Madhya Pradesh Laghu Udyog Sangh, told Business Standard.

The new rules, according to a government insider, will offer more facilities for services necessary for industrial areas. However, if the Amended Rules take shape, it is learnt that land rates will go up further from Rs 80 per square metre (existing Rs 24 per sq meter) to Rs 120 per square metre for large industries in developed districts where combined investment is more than Rs 100 crore.

"Land development charge at 25 per cent of the premium, maintenance charge at 2 per cent of the total cost of the land and lease rent of 1 per cent of the total cost of the land are also proposed to be levied," said the source adding, "the department of industries had already invited suggestions from industry and now talks will begin on 18 of this month."

Small and medium entrepreneurs will have to shell out Rs 20 per sq metre and Rs 40 per sq metre.

New provisions are also being readied for land allotment for developing dry-ports or container depot, railway siding, office space for industrial association, banks, post offices, employment, training and rehabilitation centers, police stations, effluent treatment plant, fire brigade, crèches and non-conventional energy production plants. There is no provision for these facilities. The new rules will allow private parties to develop most of the activities.

"Plans are afoot to make land area available for small business on lease rent basis. In an industrial area where there is less industry associated infrastructure is available the government will offer land on a minimum lease of Rs 1000 per year on a token amount of Rs 1 per 1000 sq meter and 2% holding charges.

The government has a plan to create a fund for promoting public-private partnership. The proposed hike will contribute to a kitty reserved for creation of private-public fund. The fund will be utilized for industrial development area.

The new rules will also spell out terms on counseling services like testing lab, research and development, security system, labour services.

"Land will be available at double rate of those proposed for small scale industries," the source added.

All industrial areas lack semi-commercial activities like sports centers, laundry, cyber cafe and nursing homes etc. Land is available at commercial rates in industrial areas. With the introduction of new rules, the land areas will be much cheaper for the business activities.

To protect the interest of farmers who offer their land for industrial purpose will be offered a minimum of 1000 sq meter of land for small business activities in industrial areas. As of now he state land allotment rules have no provision for the same.