Source: The Economic Times August 29, 2013

Land acquisition cost may go up to 3.5 times: India Inc

CII said it has always emphasised on the need to streamline the land acquisition process to boost manufacturing and promote job creation in the industry.

NEW DELHI: Land Acquisition Bill, passed by the Lok Sabha tonight, may push up cost of acquiring land by up to 3.5 times, making industrial projects unviable and raising overall costs in the economy, India Inc said.

Industry chamber CII said it has always emphasised on the need to streamline the land acquisition process to boost manufacturing and promote job creation in the industry.

"But the industry has serious concerns on some of the provisions of the Bill as it is expected to increase the cost of land acquisition by 3-3.5 times, making industrial projects unviable and raising costs in the overall Indian economy," CII President S Gopalakrishnan said.

At a time when major projects are stalled and India's global competitiveness is eroding, a more facilitative land acquisition process would have helped long-term growth and restore investor sentiments, he said.

Sharing similar views, Assocham Secretary General D S Rawat said: "...the industry feels that the cost of acquiring land for the industrial projects and the realty sector will go sky-high which is something not desirable and the Indian industry is battling a sever slowdown."

The path-breaking Land Acquisition Bill, which seeks to provide just and fair compensation to farmers while ensuring that no land can be acquired forcibly, was passed by the Lok Sabha with overwhelming majority tonight.

Further, CII said, the Resettlement & Rehabilitation (R&R) cost is likely to go up by about 3 times compared to the prevailing practice. The Bill compensates different categories of affected families at par not aligned to their losses.

"We have always maintained that land acquisition mechanism in the country should balance the interests of affected families with industry affordability," it said.

The retrospective applicability of the Bill would severely affect the on-going industry projects as re-starting the entire land acquisition process would lead to avoidable delays and consequent cost over-runs, it added.

Another major cause of concern in the Bill is restriction on acquisition of multi-cropped land that would affect projects such as mineral extraction whose location cannot be chosen, the chamber said.

"The provision calling for return of unutilised land after five years would affect the expansion plans of industries that grow in phases. It also provides for leasing of land which, besides introducing inherent uncertainties regarding renewals particularly for short time periods, is also bound to impact mergers and acquisitions," it said.