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Uttar Pradesh has introduced a draft policy to streamline land allocation for group housing projects across three industrial development authorities. The policy aims to prevent defaulters and companies linked to defaulting promoters from participating in bids. The move seeks to recover approximately INR 40,000 crore in dues. It outlines eligibility, lease terms, and financial criteria to ensure only viable developers qualify. Notably, applicants must have a net worth of at least INR 30 crore for plots up to 1 lakh sqm, increasing for larger plots. The draft also proposes measures for transparent bidding, land transfer policies, and handling delays.
A new draft policy aims to standardize how land is allocated for group housing projects by three industrial development authorities. This policy would stop developers who are listed as defaulters by any of the three authorities or companies run by promoters with past defaults from participating in bids. The draft is being reviewed by the authorities and could help them recover a combined INR 40,000 crore in unpaid land dues. The need for a unified policy was identified over 15 years ago due to inconsistencies that created confusion for businesses. Although a plan was started in 2010, it was not completed due to logistical challenges. Advertisement
The new draft, spanning 140 pages, outlines clear criteria for land allocation, including eligibility rules, lease terms, rent structures, and application procedures. For group housing projects, all types of business entities such as proprietorships, partnerships, LLPs, and limited companies-will be subject to the rules. Defaulters or those with directors/promoters who have defaulted will be barred from applying. However, a wholly owned subsidiary can apply with its parent company as a joint participant. Consortiums of up to five companies can bid for plots larger than 10,000 sqm if one member holds at least 51% equity and others hold at least 10% each. They must create an agreement detailing each member's role and responsibilities and form a special company to manage the lease if approved.
To ensure financial stability, the policy requires developers to have a net worth of at least INR 30 crore for plots up to 1 lakh sqm, verified by a statutory auditor, and INR 60 crore for larger plots. This measure aims to avoid financial failures seen in past group housing projects.
For large industrial projects, the draft allows the state government to allocate plots directly to speed up investments but proposes interviews for plots above 8,000 sqm. Applicants must pass a vetting process and score at least 60% to qualify.
The policy recommends auctioning plots up to 8,000 sqm after a screening process. If there are fewer than three qualified bidders, two extensions of seven days each are allowed. If still fewer than three bidders are present, the highest bidder wins the plot. The draft introduces a dynamic bidding system, allowing eligible investors to bid on multiple plots beyond their initial applications. Bids must always exceed the reserve price, promoting fairness and transparency.
The policy also sets rules for land transfers, allowing them after a completion certificate is issued, and includes a plot surrender option before a show-cause notice is given. If developers fail to surrender or pay dues, the authorities can cancel unused land, forfeiting penalties and rent but returning 70% of deposits unless fraud is involved. A "zero-period" clause pauses financial obligations like premium and interest payments during legal or administrative delays, ensuring developers are not unfairly charged. Payments resume once the issues are resolved without extra interest.
The new draft policy aims to streamline land allocation for group housing projects by establishing clear criteria for eligibility, financial stability, and bidding processes. By addressing issues like defaulters and ensuring transparency, the policy seeks to recover significant unpaid land dues and foster fairer competition. It also introduces measures to speed up investments in industrial projects and provides safeguards for developers facing delays. Overall, the policy looks to create a more organised and equitable framework for land allocation, benefitting both authorities and businesses in the long run.
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