Monthly Archives: May 2020

Industry can now buy land directly from farmers in Karnataka

Karnataka Land Reforms Act 1961 Amended: Industry can now buy land directly from Karnataka farmers

  • Karnataka Implements changes to Section 109 of land Reforms Act 1961, to allow industries to buy land directly from Farmers
  • The amendments come into force from 20.11.2019
  • Units will still need nod from States Revenue department
  • Applications to be cleared within 30 days by the concerned Deputy Commissioner, failing which it will be deemed approval

This was been one of our long standing demands. Read here

A major reform to increase competitiveness and to boost industrial development in the state of Karnataka has been enacted paving the way for easy access of land to Industries. Neighbouring states of Tamil Nadu, Telangana & Andhra Pradesh have been allowing this for a while. A 3 year process earlier, would now take only about 30 days – there by removing many impediments and position Karnataka as an alternative sourcing hub to companies who are looking to move out of China post COVID 19

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Initiatives to be taken by Karnataka State Government to revive Real Estate Industry

7th May 2020, Bangalore

As we move from Lockdown 2.0 to INDIA 2.0, we all look forward to the State government to dole out incentives & freebies to kick-start the Economy. But post COVID-19 we all know that the government’s coffers are all empty and any recommendation that will help increase the revenue of the government and at the same time, revive the industry will be more than welcome!

Real estate is driven by sentiment and there is much that needs to be done to push the demand side of it. We have been hearing news about countries like Japan, USA & South Korea wanting to move their manufacturing units from China to countries like India, Philippinnes etc. Land twice as much as Luxembourg is made available by some of the Indian states but Karnataka does not figure much in this list. In contrast neighbouring states like Andhra Pradesh, Telangana & Tamil Nadu have constituted expert committees with representatives from Korea & Japan to attract these industries

For any industry, the primary requirement is LAND.

A case in point is that of POSCO. POSCO, a South Korean conglomerate, after signing an MOU with the state government, was to set up an integrated steel plant in North Karnataka and scouted for land in Tier 2 cities of Bellary, koppal & Bijapur. For over many years the required land could not be acquired and eventually the project was stalled. Similar was the fate of AccelorMittal who were looking for land in Bellary for setting up a steel plant. Its been over 10 years & even today the projects have not taken off as the land was not made available by the state government.

If Land can be allotted by the state government, say in 30 days or 60 days and a single window clearance mechanism is established, including environmental clearances, a lot of industries will come to Karnataka. Karnataka has the required manpower, skilled labour, raw materials etc. Once these industries are setup, it will help develop the Tier 2 & Tier 3 cities & inturn increase employment, incomes & the entire vicinity of these factories will improve.

This is a major opportunity that the state of Karnataka should capitalise on.

We get a sense that our government is listening –

  • On returning from World Economic Forums our CM has proposed changes to the age old Karnataka Land reforms Act in sections 79A, 79B, 80 & 109 thereby making land easily accessible for industries.
  • Land conversions & Building plan approvals have gone online
  • Online registrations is also in the making for the first time in Karnataka

Some of the other changes that we recommend which will increase revenues for the government & also kick-start the Real Estate Industry are –

  • Not just tweaking it, but abolition of Section 79A & 79B and amending Section 80 & Section 109 of Karnataka Land reforms Act, thereby paving the way for investments in agricultural lands by individual & industries alike.
  • Extension of validity of all approvals already obtained by a period of 9 – 12 months to accommodate the delay caused by CORONA
  • Reduce stamp duty to 3% for a limited period of 6 months to induce the fence sitters to invest in Real Estate. A case in point if the state of Maharashtra which has already announced reduction in stamp duty by 1%
  • Revise guidance value of properties as they are at present exorbitant
  • Definition of affordable housing to be raised from 20 Lakhs to 45 Lakhs for reduced Stamp duty benefits as announced in the state budget
  • Property tax waiver for 1 year
  • On the approval side –
    • Issue of Commencement Certificate (CC) & Completion Report (CR) to be made online
    • Ease of doing business initiatives
    • Single window approval system without much of manual interface
    • Payment of statutory fee / Dues / license fee to be linked to stage of construction of Real estate project
    • Release orders – while the intent of the provision is well received, it puts enormous pressure on the developer to complete all civil works and obtain all NOC’s from a plethora of departments & only then be able to register plots. This eventually increases the selling price of the end product. Instead, relaxation from 100% release on complete development to the hitherto system of 40:30:30 rule or equivalent is recommended.

These measures, along with the steps taken by the Reserve Bank of India (RBI) to put of money in the hands of the consumers & also paving the way for reduction in interest rates on housing loans will have a multiplier effect, boost demand and revive the Real Estate industry.

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