Maharashtra’s industrial policy: Missed opportunity?

By Anjan Dasgupta and Roochi Loona, HSA Advocates
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To provide a way for denotified special economic zones (SEZs) to be developed into integrated industrial areas (IIAs), the government notified the Integrated Industrial Policy, 2013 (policy).

The policy came into effect on 1 April 2013 and is applicable to land owned by the state government, the Maharashtra Industrial Development Corporation (MIDC) or the City and Industrial Development Corporation of Maharashtra (CIDCO). Schedule A of the policy sets out the eligibility criteria for the development of IIAs.

Anjan Dasgupta, HSA Advocates
Anjan Dasgupta
Senior partner
HSA Advocates

Allocation of land: The allocation of land for development was modified to 80% for industrial development and 20% for support activities from 60% and 40% respectively for land owned by MIDC, based on the development control regulations (DCRs) issued by MIDC. No separate DCRs have been issued by CIDCO, therefore, IIAs located on CIDCO lands will continue to be governed by the 60:40 ratio (in accordance with the policy), unless a specific clarification is issued by the state government.

For instance, in case of the Navi Mumbai SEZ (NMSEZ), an SEZ located on CIDCO land, 15% of the land has been reserved for residential and commercial purposes and related support activities while 85% has been reserved for industrial purposes, as originally agreed between CIDCO and the developers of NMSEZ.

The policy also requires a minimum of 20 hectares (lowered from 40 hectares) of contiguous land to be available for development and establishment of IIAs.

Roochi Loona
Principal associate
HSA Advocates

Manner of notification: In accordance with schedule A, joint venture SEZs originally approved by the state cabinet, would require a state cabinet approval for conversion into an IIA. MIDC has the right to notify private land originally acquired by it for SEZs as IIAs, in accordance with the provisions of the Maharashtra Regional and Town Planning Act, 1966 (MRTP Act). No such clarification has been provided for CIDCO lands and it is unclear whether CIDCO or the state government will approve the conversion of SEZs into IIAs. The policy is also silent on whether in such cases the procedure under the MRTP Act will be applicable or the provisions of CIDCO’s DCRs.

Permissible land-uses: A quarter of the total area earmarked for support activities must be used for commercial or economic activities, while the remaining must be used for residential and non-residential purposes. Development permission for residential and commercial activities will be given only after the area earmarked for infrastructure development is developed and after a third of such area is disposed of. The policy does not define the term infrastructure. For CIDCO and MIDC to give development permission for such activities, it is imperative that the policy specifies what constitutes infrastructure.

Procedure: The planning proposal of the IIA is required to be approved by the Director of Town Planning, Pune (DTP), in accordance with the procedure under the MRTP Act. Building plans need to be approved by the concerned SPA. The policy does not specify timelines or the order in which the approvals are to be obtained from the DTP and the SPA.

Development of an IIA is required to be completed within 10 years from the date of final sanction to the layout plan of the IIA.

Shortcomings: The policy has been notified pursuant to an amendment to the Maharashtra Industrial Development Corporation Act, 1961 (MIDC Act). Although the MIDC Act is not applicable to CIDCO, it has been made applicable to the policy.

A developer is required to provide all basic infrastructure in at least 75% of the IIA within three years from the date of sanction of the development proposal by the DTP, failing which the approval shall lapse. As pointed above, the policy does not specify what qualifies as basic infrastructure. Further, the policy does not specify whether this condition is applicable to lands owned by CIDCO as it only refers to areas declared as IIAs by MIDC.

Maharashtra, therefore, seems to have missed an opportunity to combine the development of IIAs with central government’s mission to develop smart cities by taking a very narrow approach while drafting the policy. The policy could have been aligned or even combined with the concept of smart city development and IIAs could have been developed with the features of a smart city. This would also have helped the state to partly meet its goal of smart city development, given that Maharashtra has a high number of SEZs that are proposed to now be notified as IIAs.

Anjan Dasgupta is a senior partner and Roochi Loona is a principal associate at HSA Advocates.

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