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Written By: OM Thakur

Shimla: In a significant move aimed at boosting investment, improving ease of doing business and unlocking stalled development projects, Revenue Minister Jagat Singh Negi  tabled the Himachal Pradesh Tenancy and Land Reforms (Amendment) Bill, 2025, in the State Assembly. The Bill seeks to relax and simplify stringent land purchase restrictions under Section 118 of the Himachal Pradesh Tenancy and Land Reforms Act, 1972, especially for business, industry, real estate and cooperative sectors.

The House is likely to take up detailed discussions on the proposed amendments during the ongoing Budget Session.

Govt Justifies Reform Citing Changed Socio-Economic Conditions

According to the Statement of Objects and Reasons attached to the Bill, the state’s socio-economic landscape has “significantly evolved” since the enactment of the 1972 law. The government argued that while the core spirit of Section 118—protecting land ownership rights of locals—will remain intact, specific procedural and operational provisions need simplification and rationalisation to facilitate genuine private investment and job creation.

Officials said that over the years, businesses, industries and investors have repeatedly flagged difficulties in acquiring land, leading to delays or abandonment of several proposed projects in the state.

Extension of Project Deadline Through Penalty Mechanism

One of the key amendments proposed in the Bill addresses a long-standing grievance of investors who, despite purchasing land with bona fide intent, fail to complete projects within the prescribed timelines due to factors beyond their control.

To resolve this, the Bill introduces a new mechanism that allows the project completion period to be extended on payment of a prescribed penalty. This provision aims to prevent the automatic cancellation of permissions and provides a structured legal mechanism to revive delayed projects.

Rural Business Leasing Exempted from Section 118

Another major reform proposed is to exempt short-term building leases — up to 10 years — for business activities in rural areas from Section 118. This move is expected to:

• Encourage entrepreneurial activity in rural Himachal.

• Promote small businesses, hospitality ventures, warehouses and service units.

• Generate local employment without long-term transfer of land ownership

Officials said this will open new opportunities for startups and MSMEs in hill regions.

Relief for the Real Estate and Housing Sector

To boost the struggling real estate and housing sector, the government has proposed to extend the existing exemption available to buyers purchasing land and flats from the Himachal Pradesh Housing and Urban Development Authority (HIMUDA) to subsequent buyers as well.

At present, only first-time buyers benefit from the exemption. The proposal would make the resale of HIMUDA properties easier to facilitate, thereby improving liquidity and buyer confidence legally.

In addition, a similar exemption is proposed for non-agriculturists purchasing completed buildings or flats developed by private developers, which could significantly revive private real estate investment in the state.

Significant Boost for Cooperative Societies

The Bill also addresses a long-pending legal bottleneck faced by cooperative societies. Though most such societies consist predominantly of agriculturists, they are legally classified as separate entities and therefore cannot acquire land as agriculturists under the current law. Even individual farmer-members are barred from transferring their own land to their societies.

The proposed amendment will now allow cooperative societies composed entirely of agriculturists to purchase land without seeking prior permission under Section 118.

The government noted that nearly 20 lakh people in Himachal Pradesh are associated with the cooperative movement. With many societies now transitioning into multipurpose cooperatives, the amendment is expected to:

• Enable new income-generating ventures.

• Promote value addition in agriculture.

• Create rural employment

• Strengthen the village economy.

Govt’s Larger Investment Push

Officials said the broader objective of the Bill is to remove structural bottlenecks in land acquisition, improve the investment climate, and attract industries, tourism enterprises, logistics hubs and infrastructure projects to the hill state.

“The reforms are aimed at striking a balance between land protection and economic growth,” a senior official said.

Extend Working Hours in Commercial Establishments

Alongside the land reforms Bill, the state government also tabled the Himachal Pradesh Shops and Commercial Establishments (Amendment) Bill, 2025, which seeks to align state labour laws with the revised Central legislation.

Key Changes Proposed:

• The maximum permissible working hours over three months will increase from 115 to 144.

• Employees can work extended hours only with their explicit consent.

• Separate overtime remuneration will be mandatory for additional work hours.

• Several commercial establishments, earlier outside the Act’s ambit, will now be brought under the regulatory framework.

The government said the amendments aim to protect labour rights while providing operational flexibility to businesses, especially in the service and retail sectors.