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Indian companies balk at new land bill

The proposed new land bill means cost increases and project delays for developers, thanks to rules that will raise land values and compel them to provide new homes, jobs, monthly stipends and a cut of future profits to former landowners.

business Updated: Sep 25, 2011 20:54 IST
Reuters

The proposed new land bill means cost increases and project delays for developers, thanks to rules that will raise land values and compel them to provide new homes, jobs, monthly stipends and a cut of future profits to former landowners.



“This just isn’t going to work for buyers,” said Rupen P Patel, managing director of Patel Engineering , an infrastructure firm specialising in power and road projects. “It is going to make a lot of projects unfeasible both in the short and long term, and growth will be hurt.”



The proposed bill, which could become law in December, will ramp up the cost of land for developers and infrastructure firms by 20% for small plots and as much as 350% for parcels of more than 100 acres, analysts said. That could push up total project costs by around 40%.



The National Land Acquisition and Rehabilitation and Resettlement Bill was first proposed in 2007 and is set to replace legislation written in 1894 by the British.



“In practical terms, there can be a rub-off effect leading to a general rise in land prices leading to problems in acquiring land for project purposes leading to delay in project awarding,” said a spokesman for Reliance Infrastructure.



“This bill is going to have a large negative impact on the big-ticket infrastructure projects,” said Gaurav Pathak, analyst at Standard Chartered in Mumbai.



The bill will be debated during the upcoming Parliamentary session that begins mid-November.

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