Karnataka to allot land for 99 years lease

Cabinet will discontinue sale of industrial land from KIADB to prevent diversion of land for non-industrial purposes

The Karnataka government has decided to discontinue the practice of land allotment to industries on an absolute sale basis. Instead, the land will be allotted on a long-term lease basis for a period of 99 years.

The state cabinet meeting chaired by chief minister Siddaramaiah on Wednesday decided to increase the lease period to 99 years from the existing 30 years for all lands acquired and transferred to industrial units from the Karnataka Industrial Areas Development Board (KIADB). The new system will help the state attract more investment, a senior minister said.

The government would also draft stringent norms to prevent diversion of KIADB industrial land for other purposes like constructing marriage halls, malls and other real-estate projects, he said.

“Henceforth, the KIADB will not sell land to any industry absolutely. It will only provide them on a lease basis. This is being done to prevent misuse of land by the allottees. The allottees cannot use the land for any other purpose other than setting up an industry. In such cases, the government will take back the land,” the minister told Business Standard.

In the past, the state government has come across many incidences of sale or conversion of KIADB land by several industrial houses allotted to them for the purpose of setting up industries. The new system will put an end to this practice and ensure the right use of industrial land, he said.

“Last year, we started the system of allotting land on a 30-year lease basis to industries. There were not many takers as they found it difficult to raise funds from bankers for such a short-term lease. So, the government decided to increase the lease period to 99 years. The industry has liked the concept and we hope to get a better response from investors,” the minister said.

Since the land will henceforth be available on a lease basis, the investors would also save money on investing huge sum for buying it and they can use the same for other purposes like working capital, and such other expenses, he said.

With this, the government would also convert those lands that were given on a 30-year lease period in the last one year into 99-year lease period, he added.

Procurement of Sugar
The Cabinet has also decided to increase the sugar purchase price by Rs 100 per quintal to Rs 2,900 per quintal for sugar procured from two factories – Mysugar, Mandya and Mysore Paper Mills, Bhadravathi. The sugar will be distributed to ration cardholders through the public distribution system.

The Food and Civil Supplies Department, which supplies sugar through the PDS mechanism, requires 120,000 tonnes of sugar annually for distribution through the PDS and from these two mills, it would meet about 60 per cent of the requirement, another cabinet minister said.

“For 2012-13, the government had paid Rs 2,800 per quintal of sugar and the factories had asked for Rs 3,000 per quintal for this year. But, the cabinet has fixed Rs 2,900 per quintal for this year,” the minister said, adding that the cardholders would get sugar at Rs 32 per kg.