Land Bill: Punjab industry worry of slowdown in business

Industry says the Bill would mar the prospects of fresh investments by making land more expensive in a state where land opportunity cost is very high

The industry in Punjab, already gasping for breath due to high cost of power, land and wage rate, might face further slowdown after the implementation of the land acquisition Bill passed in the Lok Sabha on Thursday.

Punjab missed the investment proposals of a couple of corporate giants in textiles and automobile sector in the past few years due to unviable land cost. The new Bill would mar the prospects of fresh investments in the state.

Talking to Business Standard, chairman of Vardhman Group, S P Oswal said the new law intends to make the land more expensive. The textile players require close to 100 acres for setting up vertically integrated units. High land costs would deter the industry from expansion.

The cost of land in Punjab has already gone through the roof and this is substantiated by the fact that many large textile players like Vardhman, Nahar, Trident and SEL manufacturing undertook their expansions in states other than Punjab.

"The opportunity cost of land is very high in Punjab as agriculture fetches good remuneration in the form of assured price for wheat and paddy. The price of land giving double crop is higher than one giving single crop and that of barren land is the lowest. So, land is a premium product in Punjab and the new law will reinforce the same" said K K Sardana, joint managing director of Sukhjit Startch and Chemicals Limited.

He added that Punjab charges the highest power tariff and the minimum wage rate is also higher than most states in India.

"Due to intricacies involved in land acquisition, the development of industrial focal points by the state government may also take more time," he said.

According to R S Sachdeva, co-chairman of Punjab council of PHDCCI said industry in Punjab is already reeling under a tough phase due to high input costs and lack of innovation. The cost of land is already very high and the new law would set higher benchmarks. This might close the doors for fresh investments.

It may be noted that 11 SEZs were proposed in Punjab in year 2006, but all the players gradually pulled out due to unviable land cost. The state also lost some major auto and textile investments due to high land cost.