India Inc expansion plans hit as land prices soar.

The Government's plans of boosting manufacturing have been hit by soaring land prices.

With the capital required to buy large tracts of land shooting up, acquiring land for a factory or warehouse is turning out to be a real challenge for Indian manufacturers. Experts say that unless a solution is found, India may lose out to global peers such as China and Vietnam.

The cost of land now accounts for 20-25 per cent of the project cost, say experts. An acre of land in States such as Maharashtra and Gujarat costs between ₹60 lakh and Rs. 1.5 crore.

Equipment, building and other facilities may cost Rs.4 crore per acre. Going by the rule of thumb, companies expect revenues of Rs. 20 crore per year from such an investment.

If that cannot be generated, they may choose to shelve the expansion.

HBL