In a decision that could have far-reaching implications on the 250 industrial estates in the state, the government has decided to convert the existing land allotted to them from lease-hold to free-hold.
Industrial estates will have to pay a premium to convert the land to a free-hold one. The government is expected to announce the premium rates within 60 days.
However, industrial estates are wary of the move and pointed out according to the information that they have, they will be required to pay 25 per cent of the present value of the plots held on lease by them as premium.
The Gujarat Industrial Development Corporation (GIDC) started leasing the land at Rs seven per square metre four decades ago, while the present leasing rate is Rs 875 per square metre.
The lease is for 90 years.
Besides, it will be difficult to convince all the members of an industrial estate to agree to the proposal of converting the land from lease-holds to free-hold, say industrial estate association leaders.
Although this system has not been made mandatory, the cash-strapped GIDC expects that at least Rs 400 crore (Rs billion) would come to its kitty even if 50 per cent of the estates agree to convert the lease-hold land to free-hold.
The amount so collected will form a special fund named Industrial Estate Development Fund (IEDF).
GIDC chairman Hasmukh Adhia said the scheme sent to the state government proposes that the corporation get at least 75 per cent of the amount that the estates pay as premium for conversion from lease-hold to free-hold.
"It is for the government to decide the rates, but we have proposed that the industrial estates be given back 75 per cent of the fund. Estates will be required to use this fund to upgrade infrastructure. They will be required to set up common effluent treatment plants, use non-conventional sources of energy and instal common de-salination plants and solar street light systems," he said.
At present, the industrial estates under the GIDC suffer from poor infrastructure.
This is primarily because the GIDC does not have adequate funds to upgrade infrastructure in the estates. With the lease being converted to free-hold, estates will get funds from the government from the premium that they will pay.
Adhia said under the present system, the GIDC did not have adequate financial resources to drastically improve the condition of the industrial estates. Adhia said the announcement calling for conversion of the land status will be made within two months and in the second stage, a system for rating industrial estates will be implemented.
"Private accredited agencies will rate the performance of the estates on various qualitative and quantitative parameters and the amount that will be made available to the estates from the IEDF will depend on their performance," the chairman said.
He said this will also inculcate a culture of healthy competition between the industrial estates.
G B Shah of Naroda Industries Association said this will be a difficult proposal as unit holders will not be ready to pay a premium on the present rates, especially when they got the lease on nominal rates. "Also, there are problems with holding land on a free-hold basis as there will be few buyers in case the unit holder wants to sell the land," Shah said.
Naroda GIDC is one of the biggest industrial estates in the state.
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