Telangana: Conversion of TGIIC into public limited company triggers industry fears

Move could severely impact ease of land allocation for new industrial ventures, fear industry stakeholders

Hyderabad: The Congress government’s decision to convert the Telangana State Industrial Infrastructure Corporation (TGIIC) into a public limited company has raised serious concerns within industrial circles. Industry stakeholders fear this move could severely impact the ease of land allocation for new industrial ventures, an area TGIIC was specifically set up to streamline.

Established as the nodal agency to spur industrial growth, TGIIC has so far played a pivotal role in developing sector-specific infrastructure and allocating land in sync with industry needs. However, after its conversion into a public limited company, industry sources caution that every major decision, especially those involving land allocation, will now require disclosure to shareholders and, in many cases, their approval.

“As long as the government retains majority shareholding, it can use the Board of Directors to approve land allocations to various industries. But once more shareholders enter the fray, the process could become cumbersome and commercialised, defeating the original intent,” remarked a top functionary of CII Telangana State Council, on condition of anonymity.

Adding to the worry, the government is reportedly planning to raise funds from the stock market by issuing bonds against TGIIC’s land assets. This raises the risk that, in the event of financial distress, industrial lands could be liquidated to repay shareholders, leaving potential investors and manufacturers in limbo.

The previous BRS government had pooled over 1.5 lakh acres to create one of the country’s largest land banks under TGIIC’s control for industrial development. Majority of the prime land is located in Hyderabad, Ranga Reddy and Medchal districts. Of this, around 30,000 acres were allocated to various industries during the BRS regime, while more than 1.2 lakh acres remain under TGIIC. The current market value of these lands is difficult to estimate, but industry watchers agree it runs into tens of thousands of crores.

Alarm bells began ringing after the government quietly issued an order on April 15 converting TGIIC into a public limited company. The lack of transparency has only deepened suspicion. Many view this as a desperate attempt to raise funds following the failure to monetise 400 acres in Kancha Gachibowli and the inability to secure adequate traditional market loans, with the Chief Minister himself admitting it publicly.

With the issuance of bonds now tied to the value of lands held by TGIIC, industrialists are warning that the government’s approach which is more focused on asset monetisation than on industrial facilitation, could prove disastrous. The conversion of TGIIC into a publicly traded entity may offer short-term fiscal relief, but at the potential cost of long-term industrial growth, a tradeoff many in the industry are unwilling to accept.

“Land is one of the crucial components required to attract investors besides power, water and law and order. Land meant for industry could soon become a tool for financial speculation, which could have adverse impact on industrial investments,” a senior official of TGIIC admitted.

Further, officials do not rule out possible legal complications as these lands were acquired from public or the government for specific purposes i.e. establishment of industries of different sectors and using them for any other purpose could create legal issues.