The Uttar Pradesh State Industrial Development Authority (UPSIDA) recently announced changes in the Circle Rates and Premium Rates for industrial land, which have significant implications for businesses and investors. These revised rates are aimed at attracting more investments, promoting industrial growth, and balancing infrastructure development costs with affordability.
The 44th Board Meeting, which took place on September 12, 2024, resulted in a change of the rates and lease premium rates for the UPSIDA Circle. These updated rates will become effective on September 22, 2024. Accordingly, the lease premium rates for all of the plots in the existing industrial zones are being raised by the same percentage as the one that was promulgated in the Cost Inflation Index (CII) that was notified by CBDT. As a result of this, the rates of the leasing premiums have been raised by 4.31 per cent for the fiscal year 2024-25 in the premium rates that are currently in effect. In compliance with the consent granted by the Chief Executive Officer regarding the determination of lease premium rates for various assets owned by the Authority, the following office order is being issued under the minutes of the 44th Board meeting:
What are New UPSIDA Circle Rates and Premium Rates?
Circle Rates refer to the minimum rate at which land can be registered in the government's records. These rates are set by the government and vary depending on the location, type of land, and other factors. Circle rates serve as the benchmark for land valuation and are crucial for calculating stamp duty and registration fees.
Premium Rates, on the other hand, are the rates charged by UPSIDA for allotting industrial plots. They are typically higher than the circle rates, reflecting the value-added services and infrastructural support provided in industrial areas.
Key Highlights of the Revised Rates
1. Location-Specific Adjustments: The revised circle and premium rates vary across different districts and industrial zones under UPSIDA's jurisdiction. For example, premium rates in Tier-1 cities like Lucknow, Kanpur, and Gautam Buddha Nagar (Noida) have been increased to reflect growing demand and improved infrastructure.
2. Focus on Industrial Growth: The revised rates are structured to promote industrial growth in less developed regions by offering competitive pricing for industrial land. Areas such as Jhansi, Chitrakoot, and Aligarh have seen modest increases or even reductions in premium rates to attract new industries.
3. Incentives for MSMEs: The new rate structure includes specific incentives for Micro, Small, and Medium Enterprises (MSMEs). These businesses can now avail of discounted rates in certain industrial areas, facilitating easier access to affordable land.
4. Green Zones and Eco-Friendly Projects: UPSIDA has introduced premium rates for green zones and eco-friendly industrial projects. These zones offer lower rates to industries that focus on sustainability, renewable energy, and minimal environmental impact.
5. Rate Hikes in High-Demand Areas: Industrial zones experiencing high demand, such as those near expressways or key industrial corridors, have seen significant hikes in both circle and premium rates. These areas benefit from superior connectivity and infrastructure, making them prime locations for large industries.
6. Infrastructure and Connectivity Considerations: The revised rates factor in the development of new infrastructure projects, such as expressways, metro extensions, and industrial corridors. Industrial areas that are well-connected to major transport networks have witnessed an increase in premium rates to reflect the enhanced value.
Implications for Businesses and Investors
The revision in circle and premium rates by UPSIDA is expected to have a mixed impact on businesses and investors:
Increased Costs in Prime Locations: Businesses looking to establish industrial units in high-demand areas like Noida and Ghaziabad may face increased land acquisition costs. However, the improved infrastructure in these areas justifies the rate hikes.
Opportunities in Emerging Regions: On the flip side, businesses that are willing to invest in emerging or less developed regions can benefit from more affordable land rates. With the government focusing on balanced regional development, these areas may see rapid growth in the coming years.
MSME Growth: The lower rates for MSMEs and green projects present a significant opportunity for smaller businesses looking to set up operations in Uttar Pradesh. These incentives align with the government's broader policy of fostering entrepreneurship and sustainable growth.
Conclusion
UPSIDA’s revised Circle and Premium Rates are a reflection of Uttar Pradesh’s evolving industrial landscape. While businesses in prime locations may have to pay more, there are ample opportunities in emerging regions and for eco-friendly projects. For investors and industrialists, these changes underscore the importance of location and strategic planning when acquiring land for industrial purposes.
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