Cabinet may take up new land policy for Concor within two weeks

The Union Cabinet is likely to take up a new land licensing fee (LLF) policy within two weeks, a senior government official told Moneycontrol.

Not clearing the LLF was considered a key roadblock in the privatisation of Container Corporation (Concor). According to a source aware of the development, the new policy will bring down the land lease rates for use of railway land for industrial purposes to less than 3 per cent.

To create a level playing field, the new licensing policy will not just be applicable to Concor but also to private players. The national transporter had revised the LLF charge for Concor in April last year to a fixed fee of 6 per cent linked to the market value of the land. This was set to increase at a rate of 7 per cent per annum, factoring in inflation as well in comparison with a variable fee model depending on the volume.

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The company said in its annual report that charging LLF at the rate of 6 per cent will have a significant impact on its financials. “Taking into consideration the business viability and to mitigate the impact of increased LLF on Railway land, the Company has surrendered its fifteen terminals built on Railway land,” the report said. After fixing the new LLF, the Ministry of Railways had slapped a land fee of Rs 1,276 crore for 13 terminals, well above Concor expectation of Rs 460 crore.

It was in November 2019 that the Cabinet Committee on Economic Affairs decided to sell the government’s 30.8 per cent stake in Concor, along with the transfer of management control to the buyer. According to sources, the process has been put on hold because of the land lease issue.