Bengal cancels land lease pact with 9 firms

Bengal cancels land lease pact with 9 firms

Kolkata: The West Bengal government has seen industrial projects being stalled or leaving the state on account of its inability to acquire land required for them.

It’s not surprising, then, that it has decided to cancel land lease arrangements with firms that were allotted land for industrial projects but haven’t started building the factories they had proposed.

Thus far, the government has cancelled the leases of nine companies, and it could cancel leases with many more, according to Subrata Gupta, managing director of West Bengal Industrial Development Corp. (WBIDC)—the key facilitator for industrial projects in the state.

“We will show no mercy to even big-ticket projects if the companies do not start building their factories on time," said Gupta. “But we will surely treat the iron and steel projects differently because the steel industry has been badly hit by a downturn."

West Bengal recently announced that it wouldn’t be able to scale up its information technology (IT) park at Rajarhat on account of problems related to land acquisition. Last year, it saw the small car factory of Tata Motors Ltd move from Singur in the state to Sanand in Gujarat in the wake of violent protests related to land acquisition.

Among the companies that could be hit by the government’s decision are steel makers Jai Balaji Industries Ltd, JSW Steel Ltd, Adhunik Group of Industries and Abhijeet Group that proposed to build steel plants in West Bengal. All these projects are behind schedule.

The nine companies whose leases have been cancelled were allotted small plots in industrial parks. These plots have since been reauctioned, and WBIDC received “better than expected" lease premium, according to an official of the corporation who did not want to be identified.

Two plots, together measuring 1.5 acres in a food park at Howrah near Kolkata, were leased out to a local fast food chain for Rs1.8 crore, whereas the reserve price was half that amount. “This shows there is a huge demand for land and explains why we decided to crack the whip," added the WBIDC official.

Rajesh Kejriwal, an entrepreneur who had to give up 6 acres of land at an industrial park in Bankura district, said he could not build the unit he had planned because of the downturn in the economy.

Swati Purkayastha, director of Optimal Power Synergy India Pvt. Ltd—another company which had its lease agreement cancelled—said her company abandoned plans of building a unit at Sankrail because of shortage of skilled labour in that area.

The state government wants Tata Motors, too, to either use or return the 997 acres allotted to it in Singur for building the small car factory, but the auto maker has said that it would return the plot only if “compensated" for its investment in developing the site.

The issue was discussed between the state’s commerce and industries minister Nirupam Sen and Tata group chairman Ratan Tata when they met in Kolkata on 1 September, following which the latter said Tata Motors didn’t want to “sit on unused land", but would only return the plot if compensated.

Tata Motors hasn’t indicated how much it spent on developing the Singur site, but according to officials at WBIDC, the company could have spent around Rs300 crore on this.