The manufacturing sector’s expansion plans hit as land prices soar
The Government’s plans of boosting manufacturing have been hit because the land prices have increased. Acquiring land for a factory or warehouse is turning out to be a real challenge for the Indian manufacturers. The capital required to buy large tracts of land is shooting up and this has posed a major problem for the industries.
Experts say that unless a solution is found, India may lose out to global peers such as China and Vietnam. The government should give subsidy to this sector and ease out funding so that the Indian manufacturers can acquire land at a cheaper price. The experts mentioned that the cost of land now accounts for 20-25 % of the project cost.
Equipment, building and other facilities may cost Rs 4 crore per acre. Going by the rule of thumb, companies expect revenues of Rs 20 crore per year from such an investment. If that cannot be achieved then most of the companies do not want to make such kind of investments.
Availability of land is a major issue in India. Manish Agarwal, an Executive Director at PricewaterhouseCoopers (PwC) stated that there are large delays and a lot of uncertainty in acquiring sizeable parcels of land. Agarwal is popular for his advises to the large infrastructure companies. The government needs to take measures to improve this condition.
Source- The Hindu Business Line
boosting manufacturing, Building, Equipment, Land prices, Manish Agarwal, Price water house Coopers (PwC)
