No takers for industrial land in MP as new rules stump investors

Three months after the MP government notified new rules for management of industrial land and buildings, not a single allocation has taken place due to lack of clarity on lease rates.

While suggestions from the industry association were sought by the state department during the drafting of the new rules, some last minute changes were made without its knowledge.

In April 2015, the government issued a gazette notification stating that the collector's guideline would be applied for assessing the value of industrial land close to urban areas. The industry is up in arms over the move as it led to a steep hike in lease rent rates.

“Why would any industrialist pay collector's guideline rates for leasing a property? On top of that, there are development charges. Not a single industrial land has been allocated since this new rule came into effect,” Dewas Industry Association president Ashok Khandelia said.

All industry associations, including Pithampur Audyogik Sangathan and Association of Industries, Madhya Pradesh, have opposed the new rule that they consider a major departure from previous norms.

The industry maintains that since the land is being leased and not sold, there is no question of paying the collector's guideline rates. Meanwhile, investors are in limbo over allocation of land in industrial hubs across the state.

Industrialists say investment on land constitutes a major chunk of the cost of setting up a unit, and the new rule has made it almost impossible for investors to do so in Madhya Pradesh.

Meanwhile, a delegation from the industry recently met senior government officials to apprise them of the situation. State industries commissioner VL Kantha Rao said the government is looking into the matter.

The state government had come out with a slew of measures to promote small and medium enterprises (SMEs) by reserving a portion of industrial land in every district. However, the new rule in turn increased lease rent rates making it unaffordable for smaller enterprises.

“The state government should clear the confusion at the earliest as a prolonged delay in fixing the lease rates will delay investments,” Pithampur Audyogik Sangathan president Gautam Kothari said.