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Land transfer hurdle in industry hub

Exorbitant costs of land transfer due to stringent government policies is blocking the arrival of new units at Patliputra Industrial Area.

Nearly a third of the units at the industrial hub are lying idle for years due to heavy capital required in getting the land transferred from the existing non-functional units.

Getting land at Patliputra Industrial Area, which has space for 138 small and medium enterprises (SMEs), is an expensive proposition despite 36 non-functioning units. Any new firm willing to set up a unit here needs to pay transfer tax to Bihar Industrial Area Development Authority (Biada) at 15 per cent of present market rate of land. Another 5 per cent on existing market rate of land has to be paid to Biada as development charge.

The state government had collected development charges while making the initial allotment of the land at Patliputra Industrial Area in 1959 when the hub was established. But the area doesn’t have proper roads, drains, streetlights or even a boundary wall.

Adding to prospective buyers’ woes, at the 45th board meeting of Biada on June 11, the industry department decided to hike Biada land rates. The revised rates were made effective from June 18. Biada sources said the revision is aimed at keeping the rates for land owned by the authority in tune with the market rate of residential and agricultural land.

The per acre cost of land at Patliputra Industrial Area has surged from around Rs 2.36 crore to Rs 14.95 crore. The transfer tax for buyers has also risen from around Rs 34 lakh to Rs 2.25 crore. “There have been a lot of issues plaguing normal functioning of the units at Patliputra Industrial Area. First, this industrial area is no more lucrative to set up manufacturing units due to the exorbitant market rate of land. Irrespective of Biada rate revision, the prevailing market rate of land at Patliputra Industrial Area is around Rs 20-22 crore. Thus, more and more service sector units are coming up lately due to higher returns expected from rent,” said industrialist Satyajit Singh.

Lack of infrastructure is also a major impediment to attracting new units. “The defunct sewage and drainage network here leads to frequent water-logging. Just two-three hours of rain leads to knee-deep water on roads here. Most streets are pitch dark after sunset,” said Narsingh Jaiswal, secretary-general, Patliputra Industrial Estate and Areas’ Association.

A Biada official said: “We have recently completed bidding for development of a new big drain in the area, which would be connected to small drains from the units. Work is expected to start by July end. Street lights would also be repaired around that time.”

unit count

Industrial area set up: 1959
Total area: 114 acres
No. of units: 138
Functional units: 88
Closed units: 26
Under-construction units: 14
Cancelled units: 9
Sick units: 1