Companies such as the South Korean steel maker, Posco, which abandoned its plans to set up a $5.3-billion steel mill in Karnataka recently because of hurdles to acquire land, may now decide to drop its India plan altogether due to the Land Bill.
According to sources in the state-owned coal sector in West Bengal, the proposed Act will increase the cost of acquiring coal-bearing land without removing any of the existing hurdles which delays the land transfer. In West Bengal, land is acquired through Coal Bearing Areas Acquisition & Development Act, 1957. But the compensation is linked to the provisions of the existing Land Acquisition Act and state-specific rehabilitation and resettlement plans.
At present, the acquisition process is hardly smooth. The general social resistance against land acquisition, inadequate land records in the country all create a major hurdle in settling the compensation procedure. Secondly, the lure of jobs (offered by CIL), make coal-bearing lands a tradable commodity resulting in high fragmentation. This in effect delays the acquisition process. In case the bill becomes an Act, the coal companies will face a greater problem in acquiring non-coal bearing land required for allied projects (like rail and road logistics) or, resettlement of project-affected people. Currently, such land is acquired through the Land Acquisition Act, 1894, which is now set to be replaced. In Karnataka, the government-sponsored global investors’ meet (GIM) a year ago saw a spate of MoUs being signed with various companies for setting up steel-to-auto projects but most of them have been stalled because of issues related to land acquisition.
H.V. Harish, partner, Grant Thornton, said in its current form, the Bill is being portrayed as farmer friendly by the political parties but in reality, it is anti-growth and anti-manufacturing.
A senior Karnataka Government official, however, said the Bill has, in fact, brought about some clarity on the issue of payment of compensation but “one needs to wait for the fine print’’. One project which could get impacted by this clause could be Arcleor Mittal’s $6 billion six million tonnes per annum steel plant in Karnataka. It has so far completed all necessary steps to acquire its allotted 2,659 acres and is waiting to get a possession certificate. The government official said Arcelor was currently awaiting allotment of a mining lease in the state.