Govt must bite the bullet on land reforms to ease manufacturing growth

Land is one of the most critical and contested factors in India’s push for growth in manufacturing. Acquisition is often slow and costly. The multiplicity of authorities, fragmented land records, inconsistent rates of stamp duty, and unclear titles cause delays and litigation risks, which deter investors. For companies, these bottlenecks translate into higher project costs and financing hurdles. In recent years, the government tried to address some of these issues through initiatives like the India Industrial Land Bank (IILB), digital land records under the Digital India Land Records Modernisation Programme, the Model Tenancy Act 2021 and Rera (Real Estate Regulatory Authority) frameworks, which aim to improve transparency and access. However, gaps still persist. The IILB, for instance, largely serves as an information portal rather than as a platform for actual allocation, and digitisation is still uneven across states. 

In this regard, the Confederation of Indian Industry (CII) has rightly called for a comprehensive overhaul. Its proposals, including a Goods and Services Tax Council-like land council to ensure Centre-state coordination, integrated land authorities in each state to serve as one-stop agencies for allotment, conversion, zoning, and dispute resolution, a shift to conclusive titling, and uniform stamp duty rates of 3-5 per cent, can address both governance and cost inefficiencies. It is hoped that the next-generation reforms task force, as announced by Prime Minister Narendra Modi from the Red Fort on August 15, will also look into the land issue. 

The government had earlier attempted to ease land acquisition. In 2015, during the first term of the Modi government, the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, was amended through an ordinance. The changes included easing consent requirements for acquiring land for strategic projects, industrial corridors, rural infrastructure, affordable housing, and defence; exempting such projects from social-impact assessments; and streamlining clearances to speed up timelines. However, the ordinance was met with fierce political opposition. Farmers’ groups and Opposition parties were of the opinion that it was anti-farmer, arguing that it weakened safeguards and tilted the balance in favour of companies, even though it retained generous compensation and rehabilitation provisions. With protests mounting, the ordinance was eventually allowed to lapse. 

How to make land available quickly and cheaply for development, without alienating landowners or eroding their rights, remains a point of contention. Land reform will always be politically hard, but the economic imperative is stronger than ever. They require a political consensus and transparent safeguards. Building a consensus will involve engaging not just with states and industry, but also with farmers’ groups, civil society, and local governments. However, at a broader level, the land bottleneck is not the only pending reform. The four labour codes, intended to simplify and modernise India’s outdated labour laws, are still awaiting full implementation, for example. With global supply chains in flux and a pressing need to boost the share of manufacturing in gross domestic product, unresolved issues in factor markets risk squandering a vital opportunity.