In India, the land is a scant resource, and there are multiple rules and regulations to acquire the land. As per the Indian constitution, matters related to land are part of the State list. Every state has its rules pertaining to land acquisition. The republic of India comprises 28 states and eight union territories, with a Parliamentary form of government which is federal in structure. At the central level, there is a Council of Ministers with the Prime Minister as its head. Similarly, in states, there is a Council of Ministers with the Chief Minister as its head.
Center for Policy Research (CPR), a New Delhi-based think tank, reported that there are more than 1200 laws and 150 federal laws related to the land, and this is just in 8 states of India’s total 28 states.
Acquisition of Land for the industry has always been a major issue in India. Political, social, and vested interest protests have been happening against land acquisition by many industrialists. Ignorance about land laws and opaque pricing are among other issues which plague the situation.
The foreign enterprise needs to select which state to invest in weighing different options on how progressive state governments are and have liberal policies for new industries. These states make changes in their industrial policies in accordance with the target industries. The FDI inflow in India stood at US$81.7 billion in 2020-21 because of the attractive policies and market potential. The choice of site is also dependent on other parameters, which are listed below:
- Price of Land;
- Availability of Infrastructure like roads, ports, connectivity;
- Construction cost;
- Availability of skilled workforce;
- Affordability of labor;
- Availability of utilities like uninterrupted power, water connection;
- Friendly labor laws;
- Easy of doing business policies;
- Tax benefits;
- Availability of social infrastructure like school, colleges, community centre, etc.;
Foreign businesses can either choose to create their entity in India. Which could be:
- limited liability company;
- joint venture;
- limited liability partnership.
OR can open a branch office in India after obtaining permission from the Reserve Bank of India. A branch office of a foreign company can buy immovable property in India, complying with FEMA regulations. Having an Indian entity is always recommended due to ease of operations and compliance requirements.
How can the land be acquired in India:-
- Direct purchase from landowners: Landowners are permitted to transfer their land to others, but if agricultural land is converted to commercial, industrial, or any other purpose, revenue authorities’ permissions are required.
- Negotiated purchase through government agency support: The law states that the government should take 70% of affected people’s consent in PPP and 80% consent in private projects.
- Direct allotment/ lease from government agencies: Businesses can apply to lease or purchase the nodal industrial development agency of a state for the purpose. They can approach the authorities under the Make in India Scheme and other government announced incentives.
- Government-owned industrial parks and areas: Businesses can apply to lease or purchase for commercial purposes in the specially created industrial park and complexes. They can approach the authorities under the Make in India Scheme. State-promoted industrial parks come with a price advantage, clear title, and fiscal sops.
- Privately owned industrial parks and complexes, there is a lot more flexibility when compared to state-owned industrial parks.
- Private Lease can be negotiated with owners and investors for a quick start.
Within a state, land/ industrial building acquisition is further subjected to regulations at the apex level, district level, and the local body. The apex level controls are in the form of a zoning plan, which defines the use of a particular piece of land. A zoning plan or the master plan is the land-use plan of the area. A land parcel that is not under an industrial/ manufacturing zone is to be approved for such use. Government nominated agency/ body is to be approached which is a lengthy process, often taking 6 – 12 months to obtain the clearances. Once the clearances are obtained, the transfer of property can occur, and the sale can be registered with the Registrar of stamps registering the sale of immovable properties. Post-registration, the local body is to be approached for the sanction of building plans. The building plans are reviewed, and once sanctioned, the construction can commence. Post-construction, an occupancy certificate needs to be obtained from an architect with formal approval from the sanctioning authority.
The company needs to do due diligence before purchasing any land in India to check the history of the interested land and look for anyone still holding the rights.
It is necessary to avoid any legal issues in the future. Land acquisition and building completion can often be a time consuming, frustrating process.
We at Route2Market® have decades of experience in land acquisition matters. Our fully functional logistics park in Delhi NCR and other real estate ventures are testimony to our expertise and experience. We are associated with land development agencies – private and government across India. We connect with the industrial development authorities of state government, wherever it is necessary for us to do that. We assist you in identification, negotiation and finalizing the land acquisition; for manufacturing units, trading, warehousing, etc., and look into the parameters like availability of raw materials, product profile, proximity to the market you serve, and other important parameters.