Kerala to liberalise land laws for entrepreneurs, industrialists

Thiruvananthapuram: In an apparent move to help entrepreneurs, the Kerala government is set to free up more land for industrial purposes. From now on, land in all industrial estates in the State will be leased out for a period of 60 years. The new guideline in this regard has been incorporated in the draft policy of the government on leasing out land in industrial estates.

The Department of Industries is trying to help entrepreneurs find more land even as more industrial parks are coming up across the State. The Government has recommended amendment to the clauses in Section 81 of the Kerala Land Reforms Act to enable adequate land for aspiring entrepreneurs, investors and industrialists.

The land that will be leased out to entrepreneurs/industrialists should not be sub-leased for any purpose other than warehousing. If land is given on lease for constructing buildings, the property, including the building, should be returned after 30 years. When rooms in the building are given on rent, 30% of the rent amount should be paid to the industrial agency every month.

The rent for rooms in buildings constructed by the agency will be hiked by 15% every three years after the initial 10 years. If it is found that the industrial unit has not been functioning for a continuous period of six months, the property will be taken over by the agency.

In many of the 40 industrial parks coming under the jurisdiction of the Directorate of Industries, land was given under titles (pattayams) for enterprises.

The stipulation at present is that when a land with ownership title is sold for industrial purpose, the difference in the amount between the sale price and the prevailing guideline value should be remitted to the government. This will be liberalised further and be made part of the regulations.

An entrepreneur, who has taken the land on lease for the purpose of producing a specific product or industrial activity, will be allowed to produce other products or carry out other activities too. If the new product or activity is of similar nature as the original product or service, no prior permission is needed to be taken. Making of unrelated products could be taken up after obtaining permission.

The proposed fees

Only 10% of the lease amount (maximum of Rs 5 lakh) is payable as fee if an enterprise started as a single-person proprietorship is changed to a partnership. However, 51% of the ownership should be in the original individual’s name. The same rate of fees is payable if the enterprise is changed into a limited company too. However, if the ownership goes below 51% within a period of five years, it will be considered as a change of ownership. If the enterprise merges with another company under the same management or becomes its subsidiary company, only a processing fee of Rs 10,000 needs to be paid. If a bank attaches the property and hands it over to another person under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), 10% of the lease amount is payable.

Conditions

A piece of land taken on lease under the name of the company could be sub-leased to another company. The lessee is not authorised to excavate the land, sell the soil or stones or to transport them.

If it is found that either a part or the entire extent of the leased land is not needed, it could be returned within the lease period. The lease amount corresponding to it will be refunded. The lease amount should be fixed taking into account expenses incurred in paying compensation for the acquisition of the land, surveying, and other procedures.

The leased out land will be taken back before lease period if it becomes necessary for a government purpose, the contract is violated, the unit is closed down, the lessee is declared a pauper by court, if the lease agreement is returned, if there is default in payment of lease amount, land or building is sub-leased without authorisation and if it is detected that forged documents had been provided.

Concessions for women, Scs/Sts

Concessions can be extended to Medium, Small, and Micro Enterprises (MSMEs), members of the Scheduled Castes/Tribes and enterprises by women. The tripartite contract by the lessee, bank and the industrial agency could be pledged to obtain loans from banks.

Easier inheritance

If the lessee becomes incapacitated to run the enterprise for reasons such as disease, death or inability to carry out the responsibilities, the enterprise could be bequeathed to one’s heirs without paying any additional fees. If the unit was taken on lease as a single person proprietorship, the entrepreneur is allowed to form a partnership by including members of his family as partners.