Proposed Jantri Hike May Impact Gujarat’s Industrial Investments

06 Dec 2024 CW Team

Officials in the state industries department have highlighted the urgency of completing land acquisition for over 20 planned GIDC estates across various talukas before the revised rates are implemented. Under the current compensation formula—four times the jantri rate—delayed acquisitions could lead to substantially higher costs, impacting project viability.

“Small and medium enterprises (SMEs) will face the greatest challenge, as higher land costs may render many projects financially unfeasible,” said a senior department official. Presently, land costs account for about 25% of project investments, but with the jantri hike, this share could rise steeply, potentially deterring entrepreneurs from setting up manufacturing units.

Private industrial parks are also under pressure, as higher land acquisition costs will likely be passed on to end-users, making Gujarat less competitive than other states in attracting new investments.

The district land valuation committee is expected to play a critical role in mitigating these impacts. While concessions may be possible for government acquisitions by GIDC, the increased baseline rates will still result in higher costs, particularly in rural and backward areas. This could hinder the state’s ability to offer competitive land prices to industries in newly announced estates.

Higher land prices may also affect existing industries, especially those planning expansions or operating in labor-intensive sectors requiring large land parcels. Rising establishment costs might force businesses to reconsider expansions or explore alternative locations, potentially weakening Gujarat’s position as a preferred industrial hub.

Industrial associations and chambers of commerce are urging the government to adopt a balanced approach. Aligning jantri rates with actual market conditions and industrial development goals, they argue, is essential to ensure Gujarat remains competitive in attracting investments.

The proposed revision of jantri rates in Gujarat could significantly alter land prices in Gujarat Industrial Development Corporation (GIDC) estates and private industrial parks, posing challenges to industrial investments in the state. Officials in the state industries department have highlighted the urgency of completing land acquisition for over 20 planned GIDC estates across various talukas before the revised rates are implemented. Under the current compensation formula—four times the jantri rate—delayed acquisitions could lead to substantially higher costs, impacting project viability. “Small and medium enterprises (SMEs) will face the greatest challenge, as higher land costs may render many projects financially unfeasible,” said a senior department official. Presently, land costs account for about 25% of project investments, but with the jantri hike, this share could rise steeply, potentially deterring entrepreneurs from setting up manufacturing units. Private industrial parks are also under pressure, as higher land acquisition costs will likely be passed on to end-users, making Gujarat less competitive than other states in attracting new investments. The district land valuation committee is expected to play a critical role in mitigating these impacts. While concessions may be possible for government acquisitions by GIDC, the increased baseline rates will still result in higher costs, particularly in rural and backward areas. This could hinder the state’s ability to offer competitive land prices to industries in newly announced estates. Higher land prices may also affect existing industries, especially those planning expansions or operating in labor-intensive sectors requiring large land parcels. Rising establishment costs might force businesses to reconsider expansions or explore alternative locations, potentially weakening Gujarat’s position as a preferred industrial hub. Industrial associations and chambers of commerce are urging the government to adopt a balanced approach. Aligning jantri rates with actual market conditions and industrial development goals, they argue, is essential to ensure Gujarat remains competitive in attracting investments.

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