The high land prices in Punjab have long been a deterrent for new investors and a roadblock to the expansion plans of existing companies. A systematic reform of land use could activate vacant plots,which could accelerate enterprise growth, innovation, and job creation.
By AS MITTAL
Vice Chairman, Sonalika ITL Group,Vice Chairman(Cabinet Minister Rank),Punjab Economic Policy&Planning Board
Thenewsdose.com
NEW DELHI | UPDATED: July 02, 2025, 2.10 PM
The Punjab government has recently enacted a significant overhaul of its industrial land policy, a move that promises to transform the state’s trade and economic landscape. For the first time, industrial plots ranging from 1,000 to 4,000 square yards can now be repurposed for commercial uses. This includes hotels, hospitals, industrial parks, institutional buildings, and other permitted uses, with a conversion fee set at 12.5% of the industrial reserve price. Additionally, the policy accommodates larger industrial plots of up to 40,000 square yards, which can now be developed into mixed-use integrated industrial parks (consisting of 60% industrial, 30% residential, and 10% commercial spaces).
Another significant aspect of this policy is the conversion of Punjab Small Industries and Export Corporation (PSIEC)-managed leasehold plots, which contain complex transfer clauses, into freehold properties for a nominal fee of ₹20 per square yard. This is expected to generate an estimated ₹1,000 crore in state revenue, freeing thousands of small and medium enterprises (SMEs) from cumbersome transfer and title limitations, and paving the way for the optimal use of currently unutilised assets. The new regulations aim to streamline industrial estate management, enhance the ease of doing business, and reduce litigation and uncertainty among allottees.
Unlocking Dormant Land
Previous conversion policies were introduced in 2008, 2016, and 2021. However, restrictive conditions in the 2021 policy limited potential changes. The revised policy now proposes a new set of changes for freehold plots.
Converting dormant plots into commercial spaces could drive renewed investment and optimise land use, especially in key industrial cities such as Ludhiana, Mohali, Jalandhar, and Amritsar, which host over 14,000 industrial plots across 52 focal points. Many of these plots have remained underutilised for years.
In the most recent auction cycle, PSIEC auctioned only 50 out of 260 plots, despite prices reaching 3-4 times above reserve rates (with Mohali plots fetching ₹1.5–1.65 lakh per square yard against a reserve rate of ₹39,000–₹43,000). High prices and unclear land use regulations have deterred small enterprises, ironically limiting growth in a state where the manufacturing sector contributes nearly 25% to the GDP, supported by over 3 lakh MSMEs.
The high land prices in Punjab have always been a deterrent for new investors as well as a roadblock for the expansion plans of existing companies. A systematic reform of land use could activate vacant plots, allowing SMEs to secure the necessary space for modernisation and expansion. Clearer land rights and approval processes are expected to attract developer interest and boost private investment, which could accelerate enterprise growth, innovation, and job creation.
Lessons from Chandigarh
Punjab’s reform draws inspiration from Chandigarh, where similar conversion policies were introduced in 2005. This initiative successfully unlocked approximately 788,640 square yards of commercial space from 82 industrial plots. However, the experiment—along with its rollback in 2008—serves as a cautionary tale. The dilution of master plan norms led to traffic congestion, illegal parking, and deviations from planned services. Punjab must learn from these experiences to ensure that commercial redevelopment does not disrupt or strain utilities; this requires a holistic, systems-based approach.
A Blueprint for Balanced Growth: Punjab’s ambitious industrial land use reforms are poised to be complemented by five strategic implementation steps:
1. Comprehensive Land AuditÂ
Conduct a statewide inventory of idle industrial plots in key areas, such as Ludhiana, Mohali, Jalandhar, Amritsar, and Mandi Gobindgarh. This audit should quantify vacancy durations, usage constraints, and potential commercial value, utilising records from the PSIEC and municipal mapping.
2. Infrastructure-First StandardsÂ
Link project approvals to infrastructure readiness, which includes adequate road widths, sewage systems, on-site parking, and utility connections. Commercial developments should only proceed once the necessary infrastructure is in place.
3. Zoning Discipline & Master Plan ConsistencyÂ
Maintain a minimum land plot requirement of 1,000 square yards, limit density conversions, mandate green buffers of at least 10% of the plot area, and ensure that traffic-impact assessments are conducted to prevent unplanned development, as seen in Chandigarh’s industrial areas being converted into commercial areas.
4. Environmental & Sustainability StandardsÂ
Establish mandatory Zero Liquid Discharge (ZLD) requirements for industries in pollution-sensitive areas, such as Ludhiana, and enforce environmental impact certifications. Insights from previous experiences, such as the Matthewara case, emphasise the need to prevent ecosystem degradation.
5. Fee Structure & E-Governance
Standardise a conversion fee of 12.5% and a ₹20 per square yard conversion-to-freehold fee, and include these in performance dashboards. Implement an e-portal that features clear standard operating procedures (SOPs), legal checks, and timelines to expedite title processing, thereby alleviating concerns and minimising the burden of unwanted compliance.
The Way ForwardÂ
Punjab’s modernisation of its industrial land policy represents a forward-thinking initiative, capable of unlocking significant value from currently unused areas and stimulating renewed growth in the industrial hubs of Ludhiana, Jalandhar, Amritsar, Mohali, and beyond. This endeavour could mark a pivotal moment in the state’s industrial resurgence.
Under the dynamic leadership of CM Bhagwant, it is hoped that these reforms will be executed with precision. A phased and data-driven rollout, supported by zoning discipline, infrastructure readiness, environmental care, and transparent e-governance, can enable Punjab to foster a future where its industrial legacy seamlessly blends with commercial vitality, energising opportunities, preserving ecosystems, and ensuring shared prosperity. This vision outlines Punjab’s commitment to transforming its industrial and commercial landscape through a foundation of systems, sustainability, and strategic planning. (Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect The Newsdose views.)
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