As the Rajasthan government seeks to revive the industry, it is re-evaluating the state's land allotment policy for manufacturing MSMEs. While land auctions introduced transparency, they have driven up land costs, diminishing MSME competitiveness compared to preferential allotments based on circle rates with discounts. However, the previous preferential system also faced issues as land allotment decisions depended on RIICO officials' discretion. By benchmarking best practices from other states and incorporating technological solutions, Rajasthan hopes to develop a balanced land allotment approach that supports its large MSME sector through affordable land without compromising on transparency. Getting this policy right will be instrumental in realizing the state's industrial growth ambitions as envisioned in its upcoming investors' summit.
As the new government in Rajasthan seeks a fresh start, it is re-evaluating the state's land allotment policy for manufacturing MSMEs. Cheaper land helps small businesses get off to a promising start. However, the existing system of allotting land through auctions works against their expectations.
Auctions drive up land costs, diminishing business competitiveness compared to preferential allotments based on circle rates with discounts. Yet preferential allotments are not without issues of their own.
Currently, RIICO allots land to MSMEs or businesses investing less than INR 500 crore through auctions. Larger projects investing over INR 500 crore receive land through customized preferential packages. However, MSMEs complain that auction purchases make land much costlier, jeopardizing project viability. Around 90% of Rajasthan industry is MSMEs. To help them, land needs to be cheaper.
While most industries want the auctions to be replaced, the previous preferential system faced issues as allotment decisions depended on RIICO officials' discretion. To increase transparency, the previous government introduced auctions. But this is hurting Rajasthan's MSMEs.
Rajasthan has perhaps the largest land parcel in the country, but the rates for industry are as high as in developed states Maharashtra, Gujarat and others. As the state gears up for its December investors' summit, affordable, available land will be key for investors. That's why the industries department is urgently reworking policies.
Currently, officials from RIICO, the state industrial development and investment corporation, are visiting five other states to learn about best practices and inform RIICO's policy decision.
In summary, with its vast land resources, Rajasthan has the potential to become a manufacturing hub if MSMEs can access land at competitive rates. By benchmarking best practices from other states and incorporating technological solutions, Rajasthan hopes to develop a balanced land allotment approach that supports its large MSME sector through affordable land without compromising on transparency. Getting this policy right will be instrumental in realizing the state's industrial growth ambitions as envisioned in its upcoming investors' summit.
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