Khandwa units struggle as govt fails to rationalise land diversion levy

Small and medium enterprises in Khandwa are still awaiting the state government’s response on the land diversion tax issue. The tax is levied when industrialists intend to change the use of land from agricultural to industrial.

Many industrialists have dropped plans to invest in Khandwa as the land diversion tax has been found to be too high. Khandwa is known for cotton ginning and processing, cotton seed crushing, oil and processing of pulses.

The issue is not new. It is at least a decade old. “We have yet to hear from the state government, we have discussed the issue with newly-elected government,” said Subhash Bansal, secretary, Cotton Seed Crushers Association.

The land diversion tax is now more than 250 per cent of that levied in1962. The state government had raised land diversion rates from 30 paise per 100 sq ft (in 1962) to Rs 16 in 1985 and to Rs 83 in 1998.

“In some cases the land diversion tax exceeds prevailing industrial land prices,” Bansal said.

Khandwa Collector, SB Singh, said: “I have sent the report to commissioner (land record), who will take decision on the matter.”

The issue had also been raised before the state chief minister Shivraj Singh Chouhan. He had assured industrialists of action, but nothing moved.

Clustered by cotton processing units, most of the SME units in Khandwa are either seasonal in nature or are agro-based( processing of pulses). As many as 40 units are operational in Khandwa.

Industrialists have also alleged that their oft-repeated demand to remove minimum power consumption charges has been ignored. “The Madhya Pradesh State Electricity Board levies Rs 150-200 per Kw as minimum charges from SMEs even during off-season,” Bansal added. “On an average each SME has to pay minimum Rs 20,000 a month for a consumption of 150-200 Kw.”