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Rise in land cost worries investors

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ESCALATING PRICE: Agricultural land being exploited for commercial purpose around Madurai. Photo: K. Ganesan.
ESCALATING PRICE: Agricultural land being exploited for commercial purpose around Madurai. Photo: K. Ganesan.

S. Annamalai

"If the rate goes up in southern districts, it will be a negative factor for industrialisation"

MADURAI: It is sunrise time for the southern districts with information technology industry looking southwards.

IT majors look at Madurai as another of their destinations, after Chennai and Coimbatore. Quality human resources and easy availability of land at reasonable costs are the reasons for IT and other industries preferring to come down south.

News of an IT Park for Madurai has activated not only entrepreneurs but the real estate agents as well.

Overnight, the region sees a spurt in land costs.

It is not only IT companies but also manufacturing units that are inclined to come south. But the escalation of land prices has started to worry investors.

"Any investor first looks at land. If the cost goes up, it will be a negative factor for industrialisation. An abnormal rise in land cost is unhealthy," says Sanjay Jayavarthanavelu, Chairman, Confederation of Indian Industry (CII), Tamil Nadu Region.

In Madurai, costs of land along the highways and in proximity to the airport have spiralled.

Plots developed at a cost of around Rs 20000 per cent a few years back are quoted at around Rs two lakh now.

More agricultural lands have come to be exploited for industrial and residential purposes.

Reasonable availability of water, good road connectivity and relatively lower levels of pollution are the advantages enjoyed by the region. All these factors are negated by high land costs.

"Investors will think twice before setting up their units in the southern districts, if the current upward trend prevails," points out an industrialist.

When the CII is planning to industrialise the Madurai-Tuticorin corridor what comes in the way is land cost. "It is not the owner but the middleman, who is invariably armed with a power of attorney, who indulges in this artificial increase," says a landowner. Still, land is available for industrial units at reasonable rates in estates developed by the Government. But the extent of land now available at these estates around Madurai is not enough to meet future demands.

"Develop industrial plots"

Industrialists are of the view that the Government should either come forward to develop industrial plots wherever there is an anticipated demand or formulate a law to prevent land prices from going beyond reasonable levels. They point to the success of Honeywell, global IT major, which has been doing well in Madurai, thanks to the patronage of Thiagarajar College of Engineering.

Honeywell has ambitious expansion plans here on the strength of world-class infrastructure provided by the college. If the Government comes up with a similar gesture on a large scale, more industrial units, especially in the manufacturing sector, will descend on the southern districts, investors feel.

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