Will India’s Land Pool to Lure in Foreign Investment Pull Off?

India’s creation of a land pool in preparation to lure in businesses exiting China is a smart and logical move that promises a sounder economy in these trying times. Can we be sure that it will materialize though?

As companies are exiting China, realising the pitfalls of concentrating businesses in a single region, India is taking the opportunity to lure in foreign investors by offering easy access to land in the country. The move, if successful, will prepare the nation for a much needed economic revival.

According to media reports, the land pool being planned by the government amounts to a total area of 461,589 hectares, a size double the area of Luxembourg. That includes 115,131 hectares of existing industrial land in states such as Gujarat, Maharashtra, Tamil Nadu, and Andhra Pradesh.

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While nothing official has yet been released by the government, it is a smart and logical move to make in the light of the situation. If even a third of the projected plan goes smoothly, the Indian economy would indeed receive a boost.

Land Acquisition Difficulties in India

Land acquisition has been seen as a barrier for years in India. Two years back, Saudi giant Aramco-led refinery project in Ratnagiri, Maharashtra, was to bring billions in investments and thousands of jobs. However, politics and local agitations created major delays.

Odisha witnessed the Posco fiasco, when South Korean steel giant Posco officially withdrew from the project after 12 years of public resistance and regulatory hurdles.

The same problems still exist and are likely to cause delays once again. Maybe that is why the government is asking the states to be involved in building their own programmes to take this forward.

The government has also instructed its embassies to ascertain companies that are looking for options. Countries including Japan, the US, South Korea, and China have reportedly shown interest in relocating to India, although there is no official statement from the government.

State Initiatives Indicate Optimism

Various states are already showing initiative in order to invite the most investment, which indicates optimism for the land acquisition move. States such as Gujarat, Andhra Pradesh, and Tamil Nadu are already on the trail of businesses exiting China and are vying to be first in line to receive investments.

Tamil Nadu is creating a Special Task Force to draw new investments from companies exiting China. The state government has said that they would be scouting for investors from Japan, South Korea, Taiwan, Singapore, and the US. The state has been able to bring in $29,848 million in FDI from April 2000 to March 2019.

In spite of such enthusiasm, one hopes that states are also planning how to tide over foreseeable hindrances in the form of regulations and resistance

The Gujarat government has also been trying to raise its FDI from Japan. The state, which prides itself on its infrastructure that includes a sound network of big ports and air strips, is proposing incentives and subsidies for manufacturing units in over 30 sectors. Gujarat’s principal secretary-industries, Manoj Das, has said that they have invited political and business authorities of Japan to move their commercial units and operations from China to Gujarat. Japanese business presence in the state is such that the state even has a dedicated Japanese park.

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Uttar Pradesh has also been reworking its policies for the same reason. “Food-processing was a big industry in Wuhan, the epicentre of the coronavirus, and UP could gain significantly if we are able to attract companies here,” an official told TOI.

Karnataka is also banking on its availability of skilled manpower and the industrial ecosystem to lure in investments. State Industries Department Principal Secretary Gaurav Gupta told The New Indian Express that the state is ready to invite Japanese firms with a 500-acre Japan Industrial Township, which they have been trying to market for the last six months.

“Land is also available near Bengaluru and we will also activate work on clusters, including the ‘Compete with China’ clusters which have been created anticipating large-scale manufacturing,” he said.

In spite of such enthusiasm, one hopes that states are also planning how to tide over foreseeable hindrances in the form of regulations and resistance.

Will India Pull It Off?

If India is able to pull this off in a big way, it would mean a significant boost to the nation’s economy. Higher FDI will ensure higher number of jobs for Indian youth. However, is a land pool enough to attract FDI? India is not the only one trying to lure in the fleeing companies from China.

A study done by Japanese investment bank Nomura shows that only three of the 56 companies relocating production from China between April 2018 and August 2019 chose India.

Moreover, in the race to attract the best investments, states cannot overlook the concerns of local communities. Land acquisitions have often seen problems of displacement of local populations. Ignoring these problems will only ensure that they crop up later. Centre and state together can come up with policies that benefit all parties.