Karnataka eases industrial land allotment rules

Anil Urs Bangalore | Updated on July 23, 2014

Offers 99-year lease instead of existing 30-year lease-cum-sale

Karnataka has decided to offer land to industries on 99-year lease instead of the existing 30-year lease-cum-sale through Karnataka Industrial Areas Development Board (KIADB).

The State Cabinet has cleared an amendment to the KIADB rules on land allotment.

Change needed

“There was all-round opposition to the 30-year lease-cum-sale as the financial institutions were reluctant to fund projects that required long-term investments,” a Minister said after the Cabinet meeting.

“After studying the land allotment policies of other States, we decided to opt for 99-year lease. This will be applicable to new allotments,” he added.

The amendment has been made to attract large investments ranging from ₹2,000 crore to ₹4,000 crore, which State is not getting at present, he added.

Along with the 99-year lease, the State government has also brought in strict conditions.

“For KIADB land allotments, we are putting in strict lease conditions. In an industrial compact area, no diversion of land should take place. Misuse of the allotted land will not be allowed,” the Minister said.

Decision hailed

Welcoming the government’s decision, S Sampathraman, President of the Federation of Karnataka Chamber of Commerce and Industry (FKCCI), said, “FKCCI has been demanding it for many years. We welcome it.”

“We have also placed a request that MSMEs be given up to five acres land on lease-sale basis. This helps them get bank loan more easily,” he added.

In a strong reaction, Chidananda M Rajamane, President of Karnataka Small Scale Industries Assocation (KASSIA), said, “The State government’s decision to give KIADB land on 99-year lease basis rather than sale is hostile to the interests of the small scale industry (SSI) and will adversely affect the State’s MSME growth as the SSI sector’s contribution is next only to agriculture.”

“Land allotment should continue to be on the basis of 10-year lease-cum-sale as earlier because land is the only asset that remains with the small entrepreneur and the only insurance against risks.”


The Minister said the Cabinet has decided to pay ₹100 more per quintal of sugar procured from two factories – MySugar in Mandya and Mysore Paper Mills at Bhadravathi in Shimoga.

“The sugar will be procured at ₹2,900 per quintal and it will be used for public distribution system through fair price shops,” he said.

The government last year procured it at ₹2,800 per quintal. Two factories combined are to supply 74,000 tonnes of sugar this year.

The Food and Civil Supplies Department requires 1.24 lakh tonnes of sugar a year for distribution under the PDS. The department is expected to purchase the rest in the open market.

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Published on July 23, 2014
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