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15 May 2020

Karnataka Land Reforms (Amendment) Act, 2020 to Promote Industrial Development?

Land plays a crucial role in defining the degree of Industrial Development in any state and Karnataka is no exception. Land acquisition process is one of the essential factors that contribute to industrial development and related investments.  The State Governments in India have been endeavouring and enacting a plethora of reforms easing the land acquisition process with an intention to attract major investments and in particular industrial development.

There has been a long-pending demand for land reforms in Karnataka from industry patrons. Industrialists have been raising concerns on issues/difficulties attached to the land acquisition process in the state. It has been a major cause for losing huge investment opportunities in Karnataka to other neighbouring states like Tamil Nadu, Andhra Pradesh, Telangana and Maharashtra. It became a dire necessity for Karnataka Government to work on some land reforms so that the difficulties attached with land acquisition process by the industrialists can be addressed and the State Government could compete with the neighbouring states in attracting industrial investments.

In appreciation of the current scenario and with a bonafide intention of easing land acquisition process in the state, the Karnataka Government has enacted the Karnataka Land Reforms (Amendment) Act, 2020 on 24th April 2020 (“Amended Act”).

The said amendment addresses certain issues embodied under Section 109 of the Karnataka Land Reforms Act, 1961 (“Act”), viz., deemed conversion with respect to the projects approved by the State High-Level Clearance Committee/ State Level Single Window Clearance Committee and alienation of the permitted land under Section 109 of the Act upon expiry of seven years from the date of the said permission. Accordingly, the following amendments have been effectuated to Section 109 of the Act under the Amended Act:

Section 109 (1) (i) of Act shall be substituted and amended as under: 

(i) industrial development, the extent of which shall not exceed forty units.

Explanation: ‘industrial development’ includes mining of minor minerals, whether specified or non-specified and stone crushing activity under the Karnataka Regulation of Stone Crushers Act, 2011 (Karnataka Act 8 of 2012).

Provided that in respect of Industrial Development, land to such extent approved by the Government with the approval of the State High-Level Clearance Committee/ State Level Single Window Clearance Committee under the Karnataka Industrial (Facilitation) Act, 2002 (Karnataka Act 45 of 2003) shall be deemed to have exempted by the Government from the provision of Sections 63, 79A, 79B and 80.”

Section 109 (2) the proviso shall be substituted and amended as under: 

 “Provided that, any company or organization after obtaining permission under sub section (1), purchases the land and if the company or organization after utilizing the land for not less than seven years for the purpose of purchase, does not continue to use the land due to various reasons, which are beyond its control, after seven years so permitted under rules from the date of such purchase, may on an application be permitted, by the Government, for sale of the land for the same purpose”.

Through the Amended Act, the Karnataka Government has boosted the investment channel for industrial development directing industrialists to approach Karnataka Udyog Mitra (KUM) under Karnataka Industrial (Facilitation) Act, 2002 for their respective projects so that they can avail the benefits of the deemed conversion.

Though the Amended Act endeavours to address issues related to the land acquisition process being faced by industrialists for causing industrial development in Karnataka, ambiguity remains as to what extent the Amended Act shall be able to achieve ease of land acquisition process for tangible industrial development in the state.

Consequently, except for the industrial project/s approved by the State High-Level Clearance Committee/ State Level Single Window Clearance Committee under the Karnataka Industrial (Facilitation) Act, 2002, issues relating to the land acquisition process for industrial development under Section 109 of the Act have not been specifically addressed and therefore the Amendment Act does not provide real reprieve/benefit to the industrialists aiming to invest in Karnataka. The Karnataka Government could have really eased the situation by enacting bold reforms than providing highly conservative and restrictive reforms and could have adopted the best practices from the neighbouring states to achieve an optimal result.

We hope that, in days to come, the State Government would address the pragmatic issues relating to ease of land acquisition process in Karnataka for industrial development and would be successful in attracting huge industrial investment for the benefit of the State.


Image Credits: Robin Sommer

https://unsplash.com/photos/wnOJ83k8r4w

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