Odisha MSMEs seek land mortgage right for raising funds

Issue of NOCs is pending in the case of 52 MSME units even though they have been cleared by Idco's board of directors

Amid raging controversy on issue of no objection certificates (NOCs) to large industries by Odisha Industrial Infrastructure Development Corporation (Idco), micro, small & medium enterprises (MSMEs) in the state have sought the same concession for availing loans.

Issue of NOC is pending in case of 52 MSME units even though the same has been cleared by the board of directors of Idco at a meeting held on February 10, 2014.

“The NOC of mortgage right in favour of MSMEs is pending before Idco for years together for creation of mortgage over the alloted land in order to avail financial assistance from the banks. In the meeting of the 97th board of directors of Idco held on February 10 2014, 52 MSME cases have been approved for NOCs. But unfortunately, neither NOC nor mortgage right has been issued in favour of MSMEs”, R N Sarkar, president, Odisha Young Entrepreneurs' Association wrote to Panchanan Dash, secretary (MSME).

“MSME units having acquired very small piece of land and shed at Cuttack, Jagatpur and other industrial estates beyond Bhubaneswar municipal master plan region under High Level Allotment Committee should be considered for obtaining mortgage right to banks”, Sarkar said in the letter.

In response, the MSME department has asked Idco to take appropriate action on pending NOCs for units in the sector and furnish an action taken report.

In a recent communication with the industries department, industry body Utkal Chamber of Commerce & Industry (UCCI) said for the last two years, Idco is not granting NOC to MSMEs for land mortgage creation. This has resulted in holding up all loan proposals with banks for MSME projects in Idco industrial estates. Citing that since land allotment from Idco, registration of lease deed and issue of NOC is taking too long a time, the project implementation period for MSMEs should be four years instead of two years mentioned in the proposed new Industrial Policy Resolution (IPR).

The issue of land mortgage to raise finance by industries has snowballed into a controversy with the Comptroller & Auditor General of India (CAG) in its recently released report lashing out at Idco for granting mortgage rights to industries by violating several rules in the Land Acquisition Act, 1894.

“Idco irregularly conferred mortgage rights in the lease deeds executed with 52 MoU (memorandum of understanding) based and 54 non-MoU based industries while handing over possession of 46,732.894 acres land even though such power was not vested with Idco by the state government”, the CAG report stated.