Uttar Pradesh, which is home to more than 9 million MSMEs corresponding to nearly 14 percent of the national MSME base, needs major industrial land reforms to bolster the manufacturing sector.
Apex MSME chamber Indian Industries Association (IIA) today reiterated its long pending demand for converting leasehold land in industrial areas to freehold land for promoting the ‘Ease of Doing Manufacturing’ and unlocking the land bank.
In this regard, a representation was given to UP chief minister Yogi Adityanath in the MSME Udyam Mahasammelan organized by IIA in Lucknow on Nov 30, 2023.
“The prime reason for the demand is that the entrepreneurs have to seek permissions for many works on leasehold land given by UP State Industrial Development Authority (UPSIDA) or the UP Directorate of Industries,” IIA national president Neeraj Singhal told the media today.
These permissions pertain to making a new product; changing bank limit or changing bank; transfering industry to a blood relation; giving land or building on rent; amalgamation or separation of land etc.
“To obtain such permissions, entrepreneurs sometimes fall prey to corruption. Besides, valuable time of the employees and officers of UPSIDA or Directorate of Industries is also wasted,” he observed.
Interestingly, the leasehold law was implemented during the British rule to promote industries and encourage entrepreneurs to set up units. “Therefore, there is an urgent need to change this relic of our colonial past.”
Singhal claimed that converting leasehold industrial land into freehold will bring an array of benefits to UP.
It will save the time of entrepreneurs, who would devote more time on expanding industries rather than in administrative matters.
“The gross state domestic product (GSDP) and the revenue will increase, due to which the Yogi government’s target of a $trillion economy will be achieved sooner,” he added.
New industrial investment and job opportunities will be created on freehold land, while the state will get additional revenue by way of fee/levy for such transfer.
When industrial land is given to an entrepreneur on leasehold, then the entire Land Acquisition cost, development charges & premium is levied by the government.
“When all such costs have been paid by the entrepreneur and the industry is run as per the government’s intention, then why should they not get ownership rights from tenancy,” Singhal wondered.
Several states like Haryana, Delhi, West Bengal, Chhattisgarh, Karnataka and Tamil Nadu have implemented the policy of converting leasehold land into freehold.
In 2016, the UP industrial development department issued a policy regarding freeholding of land, but is only applicable to units operating in an area of one hectare or more. This effectively weeds out the micro and small industries from its purview, he lamented.