GUJARAT

INFRASTRUCTURE AND EMPOWERMENT OF INDUSTRIAL ESTATES

INFRASTRUCTURE DEVELOPMENT - A PRIORITY ON THE STATE AGENDA

Sound physical infrastructure with easy availability of key utilities is a dream scenario for any investor. The state is aware of the fact that at present, the investment in industry overshoots the investment in infrastructure. While this may offer faster economic growth in the short run, it might ultimately prove to be unsustainable. Therefore, both industry and infrastructure should keep pace with each other so that the balance of regional development is not affected. Although Gujarat boasts of a State with one of the best infrastructure facilities, it is realized that since last a few years, other states in India have also speeded up the activity to augment their infrastructure facilities. The state has therefore, decided to benchmark itself with the quality of infrastructure available in developed countries and would also ensure that this infrastructure would be made available to both the industries and citizens at reasonable tariffs. Thus, to hasten the pace of infrastructure development, the Government would consider revisiting the existing Vision 2010 document and tailor the infrastructure projects by adding lucrative features, so as to attract private sector investment, more specifically the global players. In addition, projects with smaller financial magnitude may be identified and implemented with the help of private sector investment immediately. The state would also commission a study to identify the deterrents if any, coming in the way of private sector investment in infrastructure projects and remove them immediately. Development of infrastructure is the top priority on the state agenda.

Strengthening road network

Though Gujarat has relatively a good network of roads, it plans to strengthen this network further by converting existing roads into multi-lane roads and expressways depending upon the traffic requirements.

Pipeline for bulk supply of water

The Government also is in the process of laying pipeline all across the state for bulk supply of water for drinking and industrial purposes from the network of Narmada canals especially in the areas of Saurashtra, Kutch and North Gujarat. This will ease the perennial shortage of water in these areas and it should be possible to promote industries requiring substantial quantities of water in these areas.

Gauge conversion of railway tracks

The State Government will pursue the Ministry of Railways to complete the gauge conversion of all the rail tracks in the state as early as possible. The Government is also considering implementing metro rail project between Ahmedabad and Gandhinagar to ease the load of traffic congestion.

Establishment of SEZs and Industrial Parks

Recently, the Government came out with ordinances to encourage private developers to set up SEZs and Industrial Parks. Both these ordinances will be converted into Acts very soon. The Government will also continue to offer financial assistance for employment-oriented parks, high-tech parks and investment-oriented parks under the present scheme.

Upgradation of GIDC and private Estates

Good infrastructure is the crucial requirement of the industries. The Government is committed to bring about qualitative change in the conditions of existing GIDC estates. Some of the estates were set up in the decades of 60s and 70s and the infrastructure was designed and developed with the requirements of the time then. The Government has planned to convert the existing land allotted on leasehold basis to freehold basis to the allottees by charging appropriate premium. A portion of the premium so collected would form an integral part of a special fund to be created for upgradation of GIDC and other industrial estates, known as Industrial Estate Development Fund (IEDF). This issue is dealt in more detail in subsequent part of the chapter. The Government also plans to facilitate broadband access in major industrial estates. The new industrial estates being set up by GIDC now will have all modern amenities

Greater emphasis for upgradation of urban infrastructure

Again, keeping in mind the need to provide better quality of life to the citizens in the State, greater emphasis will now be paid to upgrade the urban infrastructure including civic amenities. For the purpose, the local bodies would be strengthened by way of greater autonomy, expertise and funding not only to maintain the existing infrastructure and systems but also to upgrade the same on a continuous basis.

Establishment of Trade Centres

Setting up of new trade centres with private investment will be encouraged and for the purpose, the existing scheme of providing subsidy for such trade centres will be continued. Looking to the present status of developments, it is felt that there is a good scope for setting up international trade centres for textiles and diamond at various places in general and more particularly in Ahmedabad and Surat. For the purpose, the state will provide all necessary facilitation services to the developers.

EMPOWERMENT OF INDUSTRIAL ESTATES

The process of facilitation would be incomplete without an active involvement and support from the representative bodies of trade and industry. For the purpose, the industrial estates will be empowered to undertake developmental activities. The Industrial Estates will aggressively take up the issues of development, maintenance and upgradation of infrastructure in their respective estates. Various innovative measures have been devised to be implemented through representative bodies of industries by redefining their role by way of developing physical, social and service infrastructure as also strengthening the member units in terms of their capacity to compete at international levels. A special fund, Industrial Estate Development Fund (IEDF) would be created for the purpose. A portion of the premium received from the conversion from leasehold land to freehold land would constitute a part of IEDF, besides the fund available through other schemes as well as market borrowings. The quantum of this fund to be made available to the individual industrial estates would depend upon their performance rating by private accredited agencies in terms of various quantitative and qualitative parameters, including managerial competence and financial management acumen. At the industrial estate level, a committee would be constituted to take decisions on the use of the funds with a representative each of GIDC and Government.

Performance rating and appraisal

As outlined above, the Government plans to empower the industrial estates by placing funds for implementation of various developmental projects in respective estates/clusters at their disposal. Each estate/cluster may have varying capacities to handle the nature and size of the projects. Before therefore deciding the quantum and nature of assistance, the Government would arrange for performance appraisal of the industrial estates from the viewpoint of technical and managerial competence as well as acumen of financial management. Past record would also be taken into account, while deciding the grading of individual estates. This rating will be carried out with the help of accredited private agencies every year and on the basis of the grading, the Government will decide the quantum of financial assistance. The rating system would infuse a culture of competition among the industrial estates, which would ultimately result into the development of member units.

ISSUES PERTAINING TO ALLOTMENT OF LAND

Making the land available in time for industrial use at a reasonable and competitive price without any hassle is the main concern of every investor to ensure that the project goes on stream without undue delay and the policy therefore has rightly given due weightage to this issue. The important issues involved are: easy availability of private land/Government land, clearing of NA permission, land acquisition and evaluation of land. Keeping in view the objective to promote industrialization in Gujarat, the Revenue Dept has so far taken following steps vide different GRs to facilitate allocation of land to industries.

1. A provision of Deemed NA has been made which allows a bonafide industrialist to acquire agricultural land and commence activity without prior NA permission, as per the provisions under Sections 63 & 65 (as amended) of Land Acquisition Act. At the executive level of local administration as well as for the knowledge of industries, this provision will be reiterated.



2. Land under restricted tenure is now easily convertible to old tenure for industrial purposes.



3. Section 63AA of Gujarat Tenency Act which came into effect from 6th March 77 enables a bonafide industrialist to possess agricultural land for setting up industrial undertaking without prior approval of the District Collector.



4. For valuation of Government land, the value upto Rs.50 lakhs is decided by the District Level Pricing Committee. In case of value exceeding Rs.50 lakhs is decided by the State Level Pricing Committee. This mechanism facilitates appropriate and quick evaluation of land.



5. As regards land acquisition, urgency clause is also invoked in deserving cases of public or private limited companies to facilitate quicker possession of land for industrial purposes.

The Government however, proposes further simplification in these matters.

Government/private land

1. The valuation procedure of Government land is being simplified further to help quicker disposal of proposals of allotment of land.



2. Jantry rationalization currently used in stamp registration is also being taken up to help speed up the valuation procedure.



3. Geographical Information System (GIS) will be developed in due course along with updating and upgradation of land records to identify parcels of Government land available for potential development. The object is to have a decentralized approach to enable an entrepreneur to get all the information at one point at the district level. The Government also plans to make available this information on-line in due course. This will also help to reduce the time of processing drastically.



4. The Government also proposes to dispense with the necessity to obtain NA permission in case of areas marked under Town Planning Schemes.



5. The Government proposes to consider the concept of allotment of Government land initially at full price to be neutralized over a period of time commensurate with the progress of project implementation.

GIDC Land

1. In case of allotment of land within the GIDC estate, the present policy of fixing the cost of land at "cost plus price” principle will be changed and the cost shall now be fixed on "Average Pricing" principle so as to generate demand for development of the estate at a price less than the actual cost. Subsequently, on development of estate, the price could be raised depending upon the demand.



2. In order to minimise the payment of NA assessment charges, GIDC would identify and earmark the land and acquire the same only before the actual allotment. In other words, the time between the allotment and acquisition would be minimised.



3. To reduce the hassles for the transfer, subletting and mortgaging the lease-hold interests in favour of financial institutions and to generate funds for the Exchequer and for providing support to strengthen the clusters including GIDC estates, the Government, as approved in principle earlier, would constitute a Committee under the Chairmanship of Hon'ble Minister of State for Industries to decide the "premium" to be charged on conversion of lease-hold land to freehold land in GIDC estates.



4. It is further decided that a portion of this premium would constitute "Industrial Estate Development Fund" which shall be administered by a committee headed by the Industries Commissioner.



5. From the Industrial Estate Development Fund, the Government would consider sanctioning the assistance in the form of grant to existing industrial estates for upgradation of infrastructure facilities. The quantum of the fund will be decided on the basis of the rating of performance and capacity of the respective industrial estates. This would help them to tie up market borrowings for such developmental projects.



6. For the purpose, infrastructure is defined as the facilities of physical, social and service infrastructure. Physical infrastructure includes internal roads, CETPs, water pipelines, sewage disposal system, effluent disposal system and landfilled sites, street lightings, desalination plants, captive power plants, water recycling plants etc. The social sector of infrastructure includes such facilities as health (e.g. clinics, trauma centres, emergency wards and hospitals), education (e.g. primary school, colleges and technical training institutes) and sports (e.g. swimming pools, tennis courts, badminton courts, gymkhana, etc), housing development, entertainment and shopping complexes. The service infrastructure would include the facilities of library, testing laboratories, centres of excellence, creativity centres, training centres etc.



7. The Government would consider offering financial assistance for development and upgradation of infrastructure in the industrial estates/clusters only towards capital cost from the Industrial Estate Development Fund. The recurring cost for maintenance of the facilities will have to be raised by the member units/beneficiary units of the estates/clusters.



8. The Government would lay down detailed guidelines for funding the industrial estates out of the Industrial Estate Development Fund. Both GIDC and private estates would be assisted through this fund for infrastructure development, as per the norms laid down by the Government. The estates desiring to seek assistance for an infrastructural project, should prepare a Detailed Project Report indicating the funding pattern and returns on the project to ensure viable operations. Other schemes like Critical Infrastructure Fund, Industrial Estate Development, etc. of the Government will also be used for financing infrastructure projects.



9. The eligibility and the extent of financial assistance from Industrial Estate Development Fund shall depend upon the rating of the estate in terms of needs, technical and managerial competence, acumen of financial management, past track record, etc. This rating will be carried out through private accredited agencies.



10. Towards privatisation, the Government has decided to encourage the estate agencies/association to convert the present system of power and water supply on a co-operative basis by setting up Common Power Plants and Common Desalination Plants. Such activities would be encouraged by the Government through funding from the Industrial Estate Development Fund.



11. Government would also encourage the replacement of present street light systems by a solar street light system in large Industrial estates/parks. Such activities would be entitled to funding from Industrial Estate Development Fund.



12. The Government would also encourage the industrial estates to set up cooperative banks to help member units to avail of finances. The Government help would come in the form of proper monitoring and regulation of the banks, development of necessary manpower and arrangement of fund from other sources. The credit rating agency will also consider the efficiency of management of the bank as an important factor to rank the industrial estate for the purpose of Government assistance.



13. At present many industrial estates and clusters have been declared as Notified Areas under the GID Act, 1962 and an officer of the GIDC is appointed to act as Notified Area Authority. To make the member units, the Associations and the Presidents of such clusters/estates more involved and responsible towards the upkeeping and upgradation of the estates/clusters, the Government is considering through a provision in GID Act, the appointment of a Legal Committee viz: Board of Management in place of Notified Area Authority. Such a Committee would be provided with autonomy and independence in the estate management. Efficient functioning of such Board of Management, would be considered by the private accredited agencies as one of the key factors while rating and according the grading. The estates would be entitled to funds from IEDF for betterment of the estate. In addition, they would also be entitled to borrow funds through instruments available in the markets for developmental projects.



14. The Committee may also decide to privatise all aspects relating to execution of services including collection of taxes and funds, maintenance and upkeep of infrastructure and all other such activities, falling within its purview.