New Delhi: India is developing a land pool nearly double the size of Luxembourg to lure businesses moving out of China.
An area of 461,589 hectares has been identified across the country for the purpose. That includes 115,131 hectares of existing industrial land in states such as Gujarat, Maharashtra, Tamil Nadu and Andhra Pradesh. (Luxembourg is spread across 243,000 hectares.)
Land has been one of the biggest impediments for companies looking to invest in India, with the plans of Saudi Aramco to Posco frustrated by delays in acquisition. Prime Minister Narendra Modi’s administration is working with state governments to change that as investors seek to reduce reliance on China as a manufacturing base in the aftermath of the coronavirus outbreak and the resultant supply disruption.
At present, investors keen on setting up a factory in India need to acquire land on their own. The process, in some cases, delays the project as it involves negotiating with small plot owners to part with their holding.
Easier pick up
“Transparent and speedy land acquisition is one of the factors which can help in boosting FDI inflows,” Rahul Bajoria, senior economist, Barclays Bank Plc, said. “This is one dimension of ease of doing business, and perhaps a more comprehensive approach is needed to supplement easier access to land.”
Need for companies to shift
Providing land with power, water and road access may help attract new investments to an economy that was slowing even before the virus hit, and is now staring at a rare contraction as a nationwide lockdown hit consumption.
The government has handpicked 10 sectors - electrical, pharmaceuticals, medical devices, electronics, heavy engineering, solar equipment, food processing, chemicals and textiles - as focus areas for promoting manufacturing. It has asked embassies abroad to identify companies scouting for options.
Invest India, the government’s investment agency, has received inquiries mainly from Japan, the US, South Korea and China, expressing interest in relocating to the Asia’s third-largest economy.
Making unused land available in special economic zones, which already have robust infrastructure in place, is also being examined. A detailed scheme for attracting foreign investments is expected to be finalized by end of the month.
States have been separately urged to evolve their own programmes for bringing in foreign investments. The Prime Minister held a meeting on April 30 to discuss steps to fast-track strategies for wooing investors.
The northern state of Uttar Pradesh is also developing an online system for land allotment for all industrial and commercial purposes and is in talks with global companies for attracting investments in sectors such as defense and aerospace.