Citing exorbitant land prices in Punjab as a deterrent, Prithipal Singh, director, Abaxis Inc ($100 million company), California, said he gave up a plan to set up a unit in Punjab.
Not just Singh, in the recent past a number of industrialists wrapped up plans and expanded in states like Himachal Pradesh, Uttarakhand, and Madhya Pradesh, because of high land prices in Punjab and infrastructural problems.
What Singh says clearly supports the United Nations Industrial Development Organisation (Unido) report and the Federation of Indian Chambers of Commerce and Industry (Ficci) study, conducted jointly with the Konrad Adenaeur Foundation (KAF), which stresses that high land prices are acting as a deterrent for investors.
In an interaction with Business Standard, Singh, who, was in Chandigarh, said, "I approached the state government, run by different parties, on several occasions and proposed setting up a medical equipment-manufacturing unit in Mohali, and asked for land at a cheaper rate or with some relaxation but nothing was done; so I dropped the plan. The land rates in Mohali are even higher than in California, which is considered one of the costliest places."
Abaxis Inc is one of the world’s leading manufacturers of medical diagnostic equipment, and established its distribution network in Delhi last year as part of its marketing strategy to reach out to the evolving markets of China and India.
Singh said if the Punjab government wanted to attract industry, it would have to offer incentives or subsidies besides infrastructure, in the way former Andhra Pradesh Chief Minister Chandrababu Naidu had done.
"Naidu offered Rs 200-400 per square yard to those who intended to set up units in the biotech centre of Andhra Pradesh," he added.
The Unido report suggested that Punjab needed to develop a comprehensive and transparent land development policy. The study also urged resuming unused land for industrial development.
Also, in a comprehensive study conducted jointly with the Konrad Adenaeur Foundation (KAF) titled “State level reforms: Increasing Investments in Punjab,” Ficci has recommended a five-point action plan to incentivise industrial entrepreneurship in Punjab and make the state an attractive investment destination.
Ficci has suggested the state government will have to enhance the attractiveness of the state as an industry hub by attending to problems of shortage of land and exorbitant land prices, inadequate industrial infrastructure with acute power shortage, an adverse tax regime and a lackadaisical approach of the state government both in terms of support and incentives offered.
The study observes that as many as 62 per cent of the respondents took a pessimistic view of Punjab as an investment destination, while only 9 per cent of the participating companies said they were optimistic about the state. The remaining 29 per cent were neutral.
According to the study, at present the industrial estates/focal points in some of the major cities in Punjab like Ludhiana, Patiala, Jalandhar and Amritsar have become highly congested. Land prices are soaring and the unusually high cost of land is acting as an impediment in the way of further investments and expansion plans.
