In a significant step to support micro, small, and medium enterprises (MSMEs), the Uttar Pradesh government has decided to roll back land conversion charges for industrial activities on agricultural land. This move is expected to provide relief to thousands of unit operators who had sought permission from housing development authorities for land use conversion. The decision comes in response to representations made by industrial bodies. The MSME department has confirmed the continuation of provisions outlined in the 2017-18 policy regarding conversion charges.
Beneficiaries and Impact
This decision is set to benefit thousands of MSME unit operators in Uttar Pradesh, where over 90 lakh MSMEs are in operation. These operators have sought permission from housing development authorities for land use conversion. Typically, conversion charges amount to one-third of the land’s value, impacting the financial viability of MSME operations.
Exemption Extension
Notably, private industrial parks planned under the PLEDGE (Promoting Leadership and Enterprise for Development of Growth Engines) scheme by private players will also receive exemption from conversion charges. In a noteworthy development, the MSME promotion policy released in 2022 did not include provisions for exemption from conversion charges.
However, following cabinet approval, an amendment was made to the policy in January this year. This amendment, applied retrospectively, ensures exemption for PLEDGE parks established in the state since February 1, 2023. This move is expected to provide a significant boost to MSME operations in Uttar Pradesh, promoting industrial growth and economic development in the region.
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While the rollback of conversion charges is a welcome relief for MSMEs, there is still a need for continued support and policy measures to address other challenges faced by these enterprises. This includes streamlining regulatory processes, enhancing access to finance, promoting skill development, and facilitating technology adoption.
Furthermore, initiatives to promote MSME clusters will play a crucial role in realizing the full potential of the MSME sector in Uttar Pradesh. Encouraging innovation and fostering entrepreneurship are also essential components for driving economic growth and employment generation in the state. The government may also consider incentivizing sustainable practices and green technologies to align MSME growth with environmental conservation goals.