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Karnataka Cabinet has cleared an amendment to the Karnataka Industrial Areas Development Board (KIADB) rules on land allotment by withdrawing the 99-year lease clause for allotment to industries.
The State Cabinet, which met under the leadership of Chief Minister Siddaramaiah, took the decision to drop the stiff clause of 99 years for allotment of land or plots to industries and infrastructure projects.
Briefing reporters after the Cabinet meeting, TB Jayachandra, Karnataka Law and Parliamentary Affairs Minister, said: “With a view to give a fillip to industrial activity in the State, a decision was taken to drop 99-year lease for land allotment.”
Prior to 2014, the State government had fixed a tenure of 10-year lease-cum-sale for land allotted for industrial activity.
Due to severe shortage of land for industrial activity and also as land was getting diverted for purposes other than industries, the government in 2014 brought in an amendment and increased the lease period to 30 years, and subsequently to 99 years. The amendment to KIADB rules is expected to facilitate lease-cum-sale of land and projects coming under the Central and State governments, public enterprises, Central-State joint ventures, for housing complexes.
Industry and trade bodies had been opposing the 99-year lease. Its withdrawal had become a long-standing demand of the Karnataka Federation of Chambers of Commerce and Industries (FKCCI), the Karnataka Small Scale Industries Association (Kassia), and the Bangalore Chambers of Industries and Commerce (BCIC) in their pre-budget memorandum.
Chambers had been vociferously opposing the 99-year lease for land allotment as it was impacting access to credit.
Welcoming the government’s decision, MC Dinesh, President, FKCCI, said: “We had been opposing the 99-year lease ever since it was brought into effect in 2014. The current move by the government will help allotment of industrial land to MSMEs. As land is a collateral security, for any small entrepreneur, it can be an easy exit route as well.”
A Padmanabha, President, Kassia, said: “Our plea to drop the 99-year lease has been finally heard. We had been requesting the government to allot land on lease-cum-sale as was done earlier under the new Industrial Policy 2014-19.”
“This is important for SMEs, as ownership of the industrial plot provides a unit necessary security to avail funds from banks. The 99-year policy is unaffordable for the SMEs in view of the upfront payment of lease rent, which makes it uneconomical,” Padmanabha added.
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