The Heavy Industries Ministry is deliberating on a proposal to use large tract of unutilised land owned by central public sector companies, which government plans to divest or sell, as ready-to-move-in industrial space for start-up companies.
“Various companies under the government of India are sitting over huge tracts of land. Instead of transferring land to other public sector units and state governments, it could be utilised to create industrial space for start-up companies,” said a senior official of Ministry of Heavy Industries and Public Enterprises.
In a concept paper, the Ministry said that the idea is to “create a landscape for ready-to-move-in businesses” so that start-up companies do not have to face hurdles for setting up business and they can start work “immediately on the business opportunity without lag.”
Construction time
Till recently, the average time for getting construction permit for businesses was 372 days, the Ministry said. “There are many problems that manufacturing units face such as site selection and land acquisition. The PSU land will be readily available to companies looking to set up quickly,” said another Ministry official.
In the concept paper, the Ministy cited the example of government’s loss-making auto company Scooters India Limited which it plans to divest soon.
The public sector company has a land asset of around 147 acres, out of which around 125 acres is unutilised. “It is located in one block on the side of Kanpur-Lucknow highway. Land could be used for manufacturing and pushing employment opportunity without lag time,” the official added.
According to the proposal, Scooters India’s 125 acre unutilised land can be valued at the market rate, converted into equity share of Re 1 each and 51% of such share offloaded to “consortium or single partner to set up a Special Purpose Vehicle (SPV).” “This will not only increase valuation of Scooters India but also provide a manufacturing eco-system conducive to job creation,” the concept note said.
‘Commendable idea’
“This is a commendable idea because PSUs have huge unutilised land area,”said Madan Sabnavis, chief economist at CARE Ratings. “We also have the problem of land acquisition for setting up enterprises. Leasing out land to start-up companies is a good way of monetising land. This way the government will get a higher value for the land. Most of the PSUs are located in places where land was acquired long time back so the appreciation would be substantial.”
The SPV will be mandated to provide modern industrial infrastructure in compliance with required regulations and construct industrial sheds to match the requirements of different manufacturing or industrial units of less than 100 employees.
“Start-up companies are attracting young professional entrepreneurs to organise product and services for the market. This SPV will fill up this gap of providing the space for incumbent ideas to be immediately implemented,” the official added.
