NEW DELHI: Welcome to India’s real investment killer. Not labour laws, not tax rates, not infrastructure—though those matter too. It’s the Change of Land Use approval, or CLU, that breaks more business plans than any competitor ever could.
Here’s how the scam works: if you want to convert agricultural land to industrial use, you need permission. Sounds reasonable. Except “permission” means navigating multiple departments, waiting for sequential approvals that can take two to three years, and paying fees that mysteriously multiply at each stage. A company that wants to build a warehouse in an upcoming industrial cluster can’t just buy the land and build. It needs to first prove the land should be allowed to become industrial—a process so broken that most investors simply look elsewhere.
The Cabinet Secretariat has finally noticed. Last month, it launched the second phase of a deregulation exercise targeting 23 priority areas. The first five focus almost entirely on land.
PA1 targets the CLU nightmare directly—simplifying or automating the entire process. PA2 creates a framework where construction permissions can be granted while master plans are still being prepared, eliminating the multi-year wait. PA3 focuses on making land in industrial clusters accessible to MSMEs, the backbone of Indian manufacturing that gets crushed by land costs. PA4 and PA5 tackle building permissions and fire-safety norms—the secondary maze that waits after you’ve survived the first one.
This isn’t random bureaucratic tidying. It’s a direct assault on why India loses factories to Vietnam and Bangladesh.
The numbers tell the story. Cabinet Secretary T V Somanathan held a meeting with all state chief secretaries on November 14, pushing for “maximum implementation” before mid-December. Tripura and Madhya Pradesh have already implemented 21 of 23 phase-1 reforms. The rest? Many haven’t even responded to queries.
That gap matters. An investor choosing between a state where CLU takes three months versus one where it takes three years isn’t making a difficult decision. The reforming states get the factories. The others get to complain about unemployment.
But land is just the beginning. The remaining 18 priority areas target utilities, labour, environment, education, and health. PA9 wants a single nodal point for all industrial approvals—ending the circus of visiting 14 departments. PA14 removes minimum land requirements for schools. PA17 does the same for universities. PA19 simplifies registration for medical practitioners across states.
Each one sounds technical. Each one represents thousands of businesses that never got built, schools that never opened, doctors who couldn’t practice where they were needed.
Here’s what makes this different from previous reform announcements: the Cabinet Secretariat is tracking implementation state by state, publishing progress, and holding chief secretaries accountable. The meeting in December will name winners and laggards.
The License-Permit Raj didn’t die in 1991. It retreated into land records, building permissions, and state-level approvals where it continues strangling Indian enterprise. This deregulation push is the first serious attempt to hunt it down in its hiding places.
The question isn’t whether these reforms matter. It’s whether your state will implement them—or keep explaining why factories prefer Gujarat.
