Andhra Pradesh capital: CII bats for land lease, not transfer of ownership

With the speculation on Capital location stoking real estate prices, the Confederation of Indian Industry (CII) has recommended to the government to allot land to prospective entrepreneurs on lease rather than transferring ownership. The industry body felt that by selling land, the government will be causing a steeper climb in the prevailing market rates of land which has become prized possessions in the VGTM (Capital) region.

This was one of the important issues that the Department of Industries and Commerce discussed with the CII and other stakeholders in the State Investment Promotion Board meeting held in Hyderabad a couple of days ago. However, there was no unanimity yet on the ideal periods for which lands can be leased if at all the Government follows the CII advice.

CII Vijayawada past-chairman and Better Castings Private Limited CEO J.S.R.K. Prasad told The Hindu that for the government, leasing of lands would ensure a steady stream of revenue and reduces the investment burden for industries at a time when infrastructure rather than Plant & Machinery accounts for 60 to 80 per cent of the capital outlays. An undesirable thing that could happen if lands were sold was their holding for the purpose of real estate business.

The CII has also recommended that entrepreneurs have to be made to pay a ‘delay tax’ of 10 per cent of the land cost after certain period till the commencement of production to discourage non-serious players and the tax could be adjusted against the sales tax payable by them.

These land policy actions would curb speculation which would eventually lead to shortage of land for the deserving entrepreneurs.

The CII’s recommendations assume significance in the context of the Government’s green signal to ‘land pooling’ for construction of the Capital city. This elaborate exercise was scheduled to begin on November 1 and come to an end in three to six months depending on the response it evokes from farmers. Against this backdrop, industrialists are waiting for clarity to emerge on the contours of Capital to execute their plans.