Industry split on state's call to give land on 99-year lease

Industrialists say extension of lease period from 30 to 99 years should facilitate more foreign investments into the state

Chambers of commerce and industry in the state have partially welcomed the Karnataka government’s decision to allot industrial land on a 99-year lease period. While the small-scale industries said the move would not be in their interests, the medium and large-scale industries have wholeheartedly welcomed the move.

The Bangalore Chamber of Industry and Commerce (BCIC) welcomed the decision to extend the lease period for KIADB Land from the existing 30 years to 99 years, stating that the move will go a long way in promoting rapid industrialisation in the state.

A N Chandramouli, President, BCIC, said: “It is a welcome move as the Government of Karnataka has now matched international practices and also the successful neighbouring states. This will prevent the flight of MNCs from Karnataka and it is a timely action initiated by the state government based on BCIC representations.”

The chamber feels that the extension of lease period from 30 years to 99 years will give a great fillip to industry and that should  facilitate more foreign investment. A lease of 99 years is a long period which would definitely give one a feel of some sort of ownership as the land cost has been a major concern of industry, he said.

Anuj Sharma, Senior Vice President, BCIC, said: “Investors are by and large happy with the land allotted by the KIADB as it comes with the necessary infrastructure like roads, power, water, drainage and connectivity which help in faster implementation of greenfield projects.”

He further urged the government to make land allotment procedures more transparent and  swift.

BCIC is of the view that considering that the states across India are competing with one another in attracting investors through focused reforms and initiatives, the KIADB needs to accelerate the pace of allotment of land and avoid undue delays in conversion of the same.

The Federation of Karnataka Chambers of Commerce and Industry (FKCCI) has thanked Chief Minister Siddaramaiah for extending the KIADB land lease to 99 years.

However, it said, the land for MSME up to five acres should be only on a lease-cum-sale basis.

The Karnataka Small Scale Industries Association (Kassia) has said that the move is hostile to the interests of the small-scale industry and will adversely affect the state’s MSME growth as the SSI sector’s contribution is next only to agriculture.

“The allotment of KIADB land, henceforth on a 99-year lease is a retrograde measure and anti-small scale industry,” said Chidananda M Rajamane, President, Kassia, adding “Land allotment should continue to be on the basis of a 10-year lease-cum-sale as before because land is the only asset that remains with the small entrepreneur and the only insurance against any adverse eventuality.”

While conceding that the decision was taken with good intentions, viz. to prevent the poaching of industrial land by real estate sharks, Rajamane remarked that the remedy could turn out to be worse than the disease.

“A majority of the available industrial land is given away to big industrial houses, leaving only a very small percentage for the ordinary small entrepreneur whose requirement is invariably limited to a few acres. The big players often use the land allotted for speculative purposes. But, in an effort to stop such gross misuse of land by large industries, the government cannot take away the last remaining semblance of succour – in the form of the sale deed issued by the KIADB – available to the small entrepreneur,” he added.

At the very least, the government should consider allotment of KIADB land on a 10-year lease rather than 99-year-lease for the MSMEs up to five acres of land, or exempt the applicability of 99-year-lease to the MSME sector, said Rajamane added.