CHANDIGARH, Punjab – In a significant move aimed at bolstering industrial growth and streamlining real estate processes, the Punjab state cabinet on Thursday greenlit sweeping amendments to its industrial plot conversion policy. The changes will allow industrial plots to be utilized for a broader range of activities, including hotels, hospitals, and office spaces, alongside a new policy for converting leasehold industrial properties to freehold.
New and renewable energy minister Aman Arora, addressing the media after the cabinet meeting, detailed the key provisions. “Industrial plots ranging from 1,000 to 4,000 square yards can now be repurposed for commercial activity, banquet halls, rental housing, office space, housing, institutes, or even industrial workers’ housing,” Arora stated, emphasizing that the specific usage would depend on categories and road width. He underscored that these reforms are expected to provide considerable relief to developers and investors across the state.
A major highlight of the cabinet’s decision is the allowance for converting industrial plots of up to 40,000 square yards into full-fledged industrial parks. These new parks will feature a mixed-use model, allocating 60% for industrial purposes, 30% for residential development, and 10% for commercial space, all under freehold tenure. The conversion will incur a charge equivalent to 12.5% of the industrial reserve price.
Adding to the impetus for industrial development, a new policy permitting the conversion of leasehold industrial plots and sheds into freehold ones also received cabinet approval. This particular measure is especially beneficial for properties managed by the Punjab Small Industries & Export Corporation Limited (PSIEC). The government acknowledged that previous leasehold arrangements often contained complex clauses regarding property transfer, leading to complications in transactions.
The new freehold conversion policy aims to simplify industrial estate management, enhance the ease of doing business, and significantly reduce litigation and uncertainty for allottees.
Minister Arora also projected a substantial financial boost for the state, anticipating additional revenue of approximately ₹1,000 crore from the conversion of plots from leasehold to freehold. Furthermore, the state government is set to accrue a considerable sum through conversion fees for these industrial plots.
He criticized previous government policies, particularly a clause imposing a 50% ‘unearned increase’ charge, which he noted had resulted in only four applications. He highlighted that under that previous regime, transfers were often permitted only by allowing applicants to defer payment of dues. Official spokespersons added that while conversion policies were introduced in 2008, 2016, and 2021, industrial associations had raised concerns over restrictive conditions in the most recent 2021 policy, which these new amendments seek to address.
