Foundry park on hold

Problems in land acquisition, coupled with the recession, have acted as a stumbling block

When envisioned in 1999, the foundry park off Ranihati in Howrah was supposed to bring to the state investments worth Rs 2,000 crore and create employment for 30,000. A decade later, the park’s launch is still tentative.

Problems in land acquisition, followed by the recession, have been stumbling blocks. Envisioned as a catalyst that would help modernise, expand and relocate the foundries of Howrah in Bengal, the park was aimed at enabling the home of castings to capitalise on increased demand in both the domestic and the international market.

“Land acquisition has been a problem, given the nature of land transfer transactions in the state. The problem was magnified by the fact that land for the project was bought, mostly, through indirect purchases. Of the 925 acres required for the park, we have till date been able to acquire 550 acres. The government acquired just 73 acres, and the rest was bought through indirect purchases,” said Tapash Chatterjee, CEO of the Foundry Cluster Development Association (FCDA).

FCDA is the special purpose vehicle (SPV) formed by industry stakeholders, as required under the IIUS scheme of the Central government, to implement the foundry park project. The SPV was incorporated in April 2005.

“The predicament with the land acquisition process has been caused by largely non-political factors. The process has been slow due to the fact that land-owners would want to bargain. Factors defining Bengal’s land acquisition problems have had an indirect bearing on the outcome of the process,” Chatterjee further clarified.

Phase-I of the park, involving 270 acres, and allocating land to 70 units, was to be complete by the end of 2009. This deadline has now been extended to the end of this year. The park is meant to accommodate 150 units. “The foundry park, we believe, is a profitable investment in light of the fact that it would provide the industry with world-class infrastructure facilities like roads. Also, units setting up house in the foundry park would find easy access to rudimentary business pre-requisites like labour and raw-material,” said S C Duggar, CEO of Bharat Engineering.

Other than this, a 220 Kw sub-station is also slated to be set up. This would ensure uninterrupted power supply. Delays have been problematic, but one would need to put things in perspective. Most unit owners investing in the park already have facilities that are currently operational.

“The idea behind investing in the park was to expand, investing in facilities that have been set up with an eye on the future. Had the park come up in time it would have no doubt been a bonus. The fact that it has been delayed is a problem, no doubt. The magnitude of the problem, however, is not one that cannot be surmounted,” Duggar said. One of the primary reasons why many in the industry are in favour of the park is that it would rid unit owners of the responsibility of taking sanctions from the pollution centres, a fact that both Chatterjee and Duggar acknowledge.

Opinion with respect to the ultimate success is, however, divided. While Duggar is a staunch supporter, the park has its detractors as well.

“There has been no progress in implementing the project, and we are being impacted as the investment is now completely stalled. My company intended to spend Rs 40-50 crore on a facility there, but I don’t see that happening soon. Most recently, we were told that the land will be ready for delivery by the middle of this year,” a prospective investor said. That deadline has come and gone. The fact that the global economy is still sluggish has made the ones focussing only on exports perceive the park in an even bleaker light. “A small-to-medium unit in the park would mean an investment of at least Rs 10 crore. In light of continuing delays in setting up the park, and global economy cues taking time to improve, an investment of such magnitude seems like a bad idea,” said Anupam Shah, National Vice Chairman of the Engineering Export Promotion Council (EEPC).

EEPC members were, incidentally, supposed to set up an engineering SEZ at the park — a prospect whose luck seems to have dipped with the fortunes of the park. Until now, despite the impediments, there have been no cancellations — the foundry park, though delayed, is still on track.