Bengal government's freehold land policy gets lukewarm response from the industry

 It was expected 50 to 60 applicants would turn up for the benefit.... But so far, only 10-odd applications have been received, says a bureaucrat

Mamata Banerjee: File image

Pranesh Sarkar, TT, Calcutta, 17.11.23 : The Bengal government’s plan to earn additional revenue by offering freehold rights to leased-out industrial plots seems to have gone awry as only about 10 industries have applied for the benefit so far in more than two months.

“It was expected 50 to 60 applicants would turn up for the benefit.... But so far, only 10-odd applications have been received. JSW Steel is the only prominent player that has applied to get the benefit for its 4,102 acres at Salboni in West Midnapore,” a bureaucrat said.

While the state cabinet has approved the proposal of JSW Steel, the other proposals may soon be placed before it, the source added.

The lukewarm response has added to the woes of the cash-strapped government as it had expected that the move would generate about Rs 4,500 crore to Rs 5,000 crore.

“But it seems that the state would be able to generate at most Rs 1,000 crore through the scheme. Of this, JSW would pay about Rs 250 crore to get the freehold status,” said a senior official.

Freehold status means conditional ownership of land.

Sources in the government said the high conversion rate that industries need to pay to get the leasehold status changed to freehold status was the major reason behind the poor response.

“The state has proposed to impose a fixed rate of 15 per cent of the current market price of the land for getting the freehold status of the industrial plots. Many industrialists consider the rate as high,” a bureaucrat said.

In case of long-term lease (for 99 years), industrialists need to pay 95 per cent of the current market price as salami when the plots are leased out to them.

“Now, another 15 per cent of the current market price needs to be paid for freehold status. Moreover, these plots were leased out some 15 to 30 years ago. Now, the market price of the plots has gone up and the industrialists are unwilling to pay such a huge amount,” a source said.

Another official said only those who had plans to give out additional land to some other investors were opting for the scheme. “For example, JSW has shown interest in accepting the benefit as it plans to give out more than 2,000 acres to other industries. This was possible because they have a huge tract of unused land since the original plan of setting up a steel plant was scaled down. Many other industries don’t have that luxury,” the official said.

A section of officials said the inclusion of riders before allowing freehold status was another deterrent.

For example, the cabinet has set a condition that JSW has to use 1,981 acres for industrial purposes and it will have to set up an industrial park on 1,989 acres. The company will be able to use only 132 acres for commercial purposes.

“Most industries don’t have enough land to set up separate industrial parks. They are only interested in getting permission to use a portion of their plots for commercial purposes so that they can generate some funds. But the strict riders can be another reason behind the lack of interest among the investors,” said a source.

A senior Nabanna official, however, said the conditions were necessary. “In the absence of any riders, there is always the possibility of the landowners closing down their units and selling off their plots.... The state cannot allow this,” the official said.