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Sipcot issues ‘Request for Expression of Interest’ from landowners to develop JV industrial parks across State

TE Raja Simhan Chennai | Updated on July 02, 2020 Published on July 02, 2020

Sipcot has so far developed 23 industrial complexes/parks, including seven sector specific Special Economic Zones across Tamil Nadu in about 34,000 acres spread over 15 districts   -  Bloomberg

New model will be a win-win for both Sipcot and land owners, say experts

The State-owned Sipcot has set the ball rolling by issuing a Request for Expression of Interest (REOI) recently from land owners to develop the JV industrial parks across Tamil Nadu to enable all districts to become industrial hubs. This comes more than a year after Chief Minister Edappadi K Palaniswami announced such a plan for Sipcot in the Assembly.

For the first time, State Industries Promotion Corporation of Tamil Nadu Ltd (Sipcot) will explore a new model of having joint ventures (JV) with landowners to develop industrial parks across Tamil Nadu. This will be a win-win for both Sipcot and land owners, say experts.

The State-owned Sipcot has set the ball rolling by issuing a Request for Expression of Interest (REOI) recently from land owners to develop the JV industrial parks across Tamil Nadu to enable all districts to become industrial hubs. This comes more than a year after Chief Minister Edappadi K Palaniswami announced such a plan for Sipcot in the Assembly.

The earlier model of Sipcot was to acquire land and develop the parks. While continuing with this model, Sipcot will hand-hold developers through JVs, said J Kumaragurubaran, Managing Director, Sipcot. Land owners with more than 100 acres can partner with Sipcot. The project will be developed by them with Sipcot lending its brand and providing all necessary help, he added.

Sipcot has so far developed 23 industrial complexes/parks, including seven sector specific Special Economic Zones across Tamil Nadu in about 34,000 acres spread over 15 districts. It also has land banks across the State for prospective and new age industries to enhance their manufacturing footprint.

New model

In the new model, Sipcot will have a minority shareholding of 2-11 per cent in the JV depending upon the capital-intensive nature of the development of the industrial park, he told BusinessLine.

The promoter (private company) will undertake the design, development, operations and maintenance of the industrial park.

In the proposed JV industrial parks, Sipcot’s role will be limited to providing equity in the form of paid-up capital/contribution of government poramboke land (dry land); rendering its brand name; ensuring smooth transfer of the benefits extended by the State government for the industrial units proposed to be set up in this JV park and rendering its knowledge and expertise in development and operations of the park (if required by the promoter), the REOI document said.

As per Government Order issued by the Industries Department on March 13, 2020, the Industrial parks developed in JV with Sipcot, will be granted 50 per cent exemption on stamp duty on the value set forth in the instruments by the JV company.

Financially viable

Shobhit Agarwal, Managing Director and CEO of Anarock Capital, a real-estate services company, said Sipcot’s new model not only addresses the multi-fold challenges of land acquisition but is also more financially viable in the current scenario as real estate costs have escalated across cities. By opting for the JV route, both these issues can be minimised to the maximum for Sipcot, he added.

This also gives private landowners with large tracts of vacant land an opportunity to put their land to proper use. Given that demand for the industrial and warehousing sector is expected to go up significantly amid Covid-19, it is a good opportunity for developers or private landowners to join hands with the State-owned agency.

Getting financial aid and attracting investors will also be much easier since the State-owned agency Sipcot would be involved. Besides this, investors may also be able to avail themselves of some of the benefits that Sipcot industrial estate enjoys such as 50 per cent exemption of stamp duty, among others, he said.

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Published on July 02, 2020
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