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Home / Chandigarh / Chandigarh mulls basing industrial plots conversion charges on collector rate

Chandigarh mulls basing industrial plots conversion charges on collector rate

Once the rates are finalised, the policy draft will be sent to the Union government for its approval

chandigarh Updated: Sep 22, 2019, 23:34 IST

The Chandigarh administration has directed the estate officer and additional secretary (estates) to report on charges to be levied for conversion of leasehold industrial plots to freehold.

“The administration is considering basing conversion charges on the collector rate. But before the final decision is taken on the issue, the administration wants a comprehensive study to be done on the pattern at the neighbouring states of Haryana, Punjab and Delhi,” said a senior Chandigarh official, privy to the development.

“The estate office and additional secretary (estate) have been directed to study the laid down conversion rates in these states and report on the issue,” the official added.

Long-standing demand

Allowing conversion of the leasehold industrial plots to freehold property has been a long-standing demand of the industrialists in the city. More than 75% of the industrial plots in Industrial Area Phase I and II are leasehold properties.

“The industrial areas in Chandigarh are in a bad shape, with nearly half plots lying unused because the industrial units have either migrated to Mohali or closed down. One of the main reasons behind the stifling of industrial growth in the city is constrains on expansion of industries here,” said Pankaj Khanna, president of the Industries Association of Chandigarh.

“Lack of a policy for conversion of leasehold to freehold for industrial plots is a major stumbling blocks for industries to expand. The local industry cannot enter into a joint venture or partnership with companies from outside as the title of the property is not clear,” Khanna added.

Ownership of the plot is with the estate office. “So, it becomes difficult for local companies to get new funds for expansion. The leasehold properties lead to banking issues as well. With lease for many plots nearing expiry, it becomes difficult for companies to attract investors or raise funds from the banks,” said Khanna.

“The conversion rates for industrial rates should be practical and not too high so as to not defeat the purpose of conversion policy. Already, the conversion policy for residential plots has not elicited good response,” Khanna said.

In principle, the administration has expressed its acquiescence to the industries’ demand but the issue has been put on hold because of the conversion rate.

“The issue of conversion rate for industrial plots is now being finalised so that the policy can be introduced for industrial plots as well. Once the rates are decided, the policy draft will be sent to the Union government for final approval,” an official said.

Few takers for additional FAR

Recently, the administration had fixed rates for additional floor area ratio (FAR) for schools and colleges. The rate is to be calculated on the basis of collector rate as per the model adopted in Punjab.

Schools were allowed additional FAR, couple years back, but as per the latest policy on fixing rates for availing additional FAR, the UT has stated that if industries are also allowed additional FAR then it too will be based on collector rate.

“Basing the FAR rates on collector rates has made it unworkable for educational institutions as it gets too expensive. Similarly, if the conversion rates are based on the collector rates, then it might make these unworkable. Collector rates for industrial plots are higher than the market rates,” said Khanna.

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