Sharp increase in land costs in the state is now forcing Gujarat government to build “vertical” industrial estates in the state. These estates, that are currently in the “design stage”, are meant to encourage small entrepreneurs to set up new micro and small industrial units in urban centres of the state where high real-estate costs act as a huge deterrent.
The Gujarat Industrial Development Corporation (GIDC), the nodal agency for industrial development in the state, is the arm of the state government that is designing these “vertical” estates in the existing GIDC estates located near cities of south Gujarat, Ahmedabad and Rajkot.
“We are working on three types of models to promote micro and small enterprises in Gujarat. One of them is to create vertical/multi-storey structures where multiple industrial spaces can be built that will have common facilities like industrial parking, stores houses and facilities for packaging and delivery,” said a senior GIDC official who did not wish to be identified.
These structures are expected to come up in 2,000-4,000 square metre plots located in existing industrial estates of GIDC. “We are currently in the design stage and we hope to finalise at least three to five such projects in a month’s time. These estates will come up in existing GIDC estates that are saturated (with industrial units) and have little space,” the official added about the concept that was first discussed in the first budget presented by the Anandiben Patel-headed government in Gujarat in July 2014.
The Government of Gujarat will be providing financial assistance to GIDC for developing vertical estates for micro and small enterprises. “In recent years there is a sharp increase in the cost of land and building construction in the country. MSEs (Micro & Small Enterprises), having very limited financial resources, find it difficult to start their units,” stated a recent state government resolution from the Industries and Mines department that offered “hand-holding support” to micro and small units.
“In the last five years, the market prices of industrial land in Gujarat has shot up by about 45 percent. This has limited the ability of small entrepreneurs wanting to set up firms in industrial clusters located near big cities,” said Nirav Kothary, Head of Industrial Services of global real-estate consultants, Jones Lang LaSalle, India. “If a 20-year period is taken into consideration, the average increase in prices of industrial land in the state has been between 12-15 percent per annum.
Apart from this, GIDC is also working on a second model which involves “creation of special estates for micro and small units” within the existing estates. “These estates will no bigger than 500-1,000 square metres. We are currently in the process of identifying land for the same,” the official said.
The third model involves creation of brand new estates for micro and small enterprises. Currently, GIDC is planning one in Khoraj located on the outskirts of Ahmedabad, near Sanand.