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Industrial Township Regulations and impact

The colonial regime was a significant turn of events in Indian history. They brought in the concept of private ownership[1] and utilitarian thought. Their aim was to realise profits and to this end, they made concept like eminent domain as means. The state was granted wide powers. Many of these policies and thoughts were continued in post-colonial India along with notions of self-government. An extremely curious case of amalgamation of both the ideas can be seen in 74th amendment[2] done in 1992.

It introduced article 243 Q (1) exception of Industrial townships. These areas were already present in India, but constitutional recognition was granted in 1992 with substantive and procedural safeguards. They are based on BOO or Build, own and operate model. The state has limited resource and knowledge which it efficiently uses with the help of private entities. This was warranted, thanks to change in our view after 1990 economic liberalization. The DPSPs like Article 38, 39, 43 A etc. were finally given due consideration.

The states were granted power to legislate on Industrial township by virtue of list 2 entry 5.[3] Industrial townships are generally special economic areas where concession in laws and other incentives are provided to private bodies to set up economic units for ease of doing business. In this backdrop, I will critically analyse the rise of Industrial Townships, the cause behind the rise by comparing Industrial townships with normal cities and type of governance. There will also be comparative study between Electronic city, Bangalore and Jamshedpur. I will also carry out a cost-benefit analysis of having such special arrangement. This will be done with the help of regulations controlling these areas and relevant case laws.

The way it started and changed.
When it comes to industrial township, one could never leave out the pioneer in this field- Jamshedpur. Jamshedpur was the first city to be planned and developed like a resident industrial area.[4] Established in early 20th century in a tribal region of Jharkhand (then Bihar) by TISCO, the model used here became a prototype and an ideal for all the subsequent developments in industrial township.[5] Over several decades, this small settlement has grown to �Jamshedpur Urban Agglomeration.� It has grown to Jamshedpur Notified Area Committee to which the industrial town is a subset. Until 2011, there was no primary legislation that governed this area. Generally municipal bodies, clauses in SEZ central policy, FDI regulations and State directives governed the area.[6]

First proper and landmark legislation for Jamshedpur was brought as Jharkhand Municipal Act 2011. The state government handed over important functions to industrial township. As already mentioned in introduction, Indian model presents an extremely curious case. The private entities not only have easy access to natural resources but also provide recreational, educational and health infrastructure. This type of governance is a point of departure from American or European model.[7]

Now coming back to Jharkhand Municipal Act, 2011. The definition of Industrial township is provided in Section 2 (58). The governance has been handed in the hands of semi-municipal corporation with private influence. They are responsible for management of resources and public works. The governance is albeit still in the hands of government with the help of local bodies. The only differentiation is the private entities oversee the work and has quite a lot of influence. The area is governed by Jamshedpur Notified Area Committee.[8] The rest of the areas are governed by local body (JUA) without outside influence.[9] The good amenities and high human life index here, is acknowledged by Asian Development Bank and United Nations Global Compact cities program.[10]

But on the other hand, the sad reality is the inequal distribution of development in JNAC and JAC areas. The JNAC has proper infrastructure for public, good residence, piped water system, sewage system and more of such. While the area surrounding it do not have any such amenities. The area was primarily tribal where rural life can be quite clearly seen in places which are nearby. The real-life condition here is quite grim now. The problem is not only with external development, but the internal development is also reaching to a saturation point.[11] The land in this area is not too suitable for life without proper amenities. The notified area was revised a long time back and the houses, systems were not sufficient for ever growing population.[12]

The creation of private bodies to regulate such areas was amenable to local self-government aspiration of Constitution, reinforced by the 74th constitution. This was welcomed by TISCO and other stake holders for obvious reason. Their influence was enhanced by this move. The residents also welcomed the private control, again they had first-hand experienced difference in development between JUA and JNAC areas. They could not trust government to be efficient and swift in the delivery of services. This was the model that should have been followed but a recent example conflates the leeway provided.

Karnataka has gone furthest with its recent legislation of Karnataka Municipal act. It provided wide discretion to democratically unelected body.[13] ELCITA is the body created with the power to levy property tax and perform municipal duties under Karnataka Municipal Act 1964.

The city is situated in peri-urban area so to [14]
  1. Take advantage of nearby city and decrease various types of costs.
  2. Small distance from Bengaluru main city ensures that the industrial function do not interfere with the transport and other amenities.
The area was under Nagar Panchayat�s jurisdiction and consequent to State acquisition of land and establishment of electronic city, ELCITA assumed power. This presents a wide array of both-internal as well as external issues.

Graham and Marvin calls the unequal development in EICTA areas and outside it as �splintering urbanism (means unequal development).� Though they also acknowledge the sustainable development inside the area and terms it as �premier network spaces with private control.�[15] The governance in the hands of company managers presents an institutional challenge but is amenable to constitutional ideals.

This difference in approach calls for an opinion as to what our legislators and judges thought about Industrial township. Logically arguing, the article 243Q (1) exception by which Industrial Township was given recognition, should be different from local self-government bodies. It was brought up as an exception to the clause. The new type of private governance bypasses the socio-economic and political structure of Indian cities. They have twin power- spatial (jurisdiction to control their affair) and institutional (unelected bodies like EICTA backed by government legislation).

Courts in some cases[16] upheld the constitutionality of Industrial township. They went as far as to distinguish between jurisdiction of Industrial board and Municipal bodies so as they can carry out their tasks without interference.[17] Unfortunately, the courts have seldom gone into the impact these towns have on environment and land acquisitions.

The comparative analysis
The object of the 74th amendment itself clarifies the purpose for which the exception was needed. This was the time when liberalisation of economy was accepted. FDI and Foreign exchange was encouraged. India was now competing with rest of the world and new institutions were ready to invest in India, given the potential it had. By 2000s there was need of ease of doing business, economic boost and employment for ever increasing population. But the socio-political hurdles were multiple in this regard. Mariana Prado considers it as an �institutional bypass� for industrialisation.[18]

These places are more aligned to match the hubs of global economy than traditional Indian cities. The tax collected from these areas are used for providing good infrastructure in the township itself. Without interference of heavy bureaucracy and in a competitive setup, the governing bodies of these area can carry out development in much easier and efficient manner. This proposition is not all talks but corroborated by statistical data. [19]

Here, the contribution of metal industry is more than 50% of GSDP of Jharkhand state, primarily consisting of plants from Jamshedpur industrial township areas. It is also true for Electronic city, Bengaluru that provides employment to more than 2,00,000 people and the contribution to the state GSDP is increasing year to year and currently stands at Rs. 8000 crores.[20] Karnataka has a GSDP of around Rs. 25,000 crores.

ELCITA has various advantage over an average municipal corporation. It subsumes all the powers of a municipality but is often hailed as better than dysfunctional corporations.[21] Smart city has also been established for proper development and welfare of people residing here. Thus, an industrial township not only benefits the industrial entities within but citizens as well. Both Jamshedpur Industrial area and Electronic city area has phenomenally high indicators of life. EICTA is also mandated to some CSR to compensate the revenue loss it brings to Panchayats of Konappana and Dodda.[22]

In another case,[23] the honourable court went into the question of desirability of Industrial townships. They understood the importance and relevance of such establishments in modern day India. On a national scale, these townships play a crucial role in economic development. It benefits the citizens by providing employment and various basic amenities. India could not compete against world powers if such initiatives are not promoted.

On a governance level, that directly influences the people residing enclosed within these areas, efficient delivery of service has become a trademark. The court in the Solapur case (citation 17), accepted that the Self-government units are becoming corrupt, incapable and inefficient.

In the Karnataka municipal act, some safeguard is provided to labourers as well. They are reserved some seats in Municipal corporation according to the industrial establishment they belong. Their wages are also reviewed by an expert committee. There is subsidy for MSMEs, easy clearance of licenses. Newer legislations like Karnataka Industrial (Facilitation) Act in 2020 and Section 109 of the Karnataka Land Reforms Act (for easy acquisition of agricultural land) also facilitate entrepreneurial spirit.

It is extremely useful if seen in a top-bottom approach. It has been often argued that economic development of this sort trickles down to benefit the people at �lower level.� There is no doubt that Industrial townships are extremely important to the economy of the state and the nation.

But there is always a head on collision between efficient development (not welfare development) and other socio-cultural, environmental and welfare concerns. The concept of industrial township offers various concerns.

First of them being constitutional. The 73rd and 74th amendment act was passed to further the ideal of local self-government in India through elected representatives. Bare reading of article 243 (Q) (1) exception gives power to the Governor to notify such areas, but states are enacting laws to subsume these powers. They directly make provisions like section 4 of erstwhile Bihar and Orrisa municipal act,1962 placing the onus of formation of Industrial township on state government. This is beneficial insofar as the aim of state legislature is on the same plane as 74th amendment act and exception to 243 Q (1).

Challenge start appearing when an undemocratic body like ELCITA consisting of private entities, starts a parallel governance. The powers in some cases have swelled to take taxation power within its purview. Land acquisition by state for public purpose and then giving all power to the company for management of the lives of people is dangerous. The companies are profit making entities and can never be altruistic. Any developmental work they do has a selfish end.

Sadly, this reasoning is often overlooked, consciously (by lobbying parties pressuring state government as in ELCIA) or subconsciously (courts often considering this as a matter of constitutionality and not welfare and human rights).

Though the trend is changing, and the courts are now keeping an eye on such cases. In a recent HC judgement of Karnataka, honourable judge held KIADB, a wholly government owned entity as �real estate agent� working for the benefit of industrialists.[24]

The onus of acquiring land is on the state.[25] I would not like to dispute that power- much because giving such power to corporates or making it voluntary for citizens to give up their land, would not work. As previously mentioned, corporate entities are no saints and people would never give up their precious lands on their own accords.

So, if development has to be undertaken, land must be acquired by the state. This acquisition is done in accordance with The Right To Fair Compensation And Transparency In Land Acquisition, Rehabilitation And Resettlement Act, 2013.

The preamble highlights certain extremely important objectives and requisites for acquisition of land. Few of them are:
In consultation with local self-government, humane-informed acquisition. The section 2 includes the words for public purpose. The significance of these words is many folds. The acquisition should be done for public purpose in consent with local self-government bodies in a humane way.

But is this true in the case of modern industrial townships? The gram panchayats under which EICTA areas fell, are still protesting that no consultation was done. As already mentioned before, HC has held KIADB as real estate agent! The lobbying by wealthy industrialists is trumping all these provisions.

The 2013 act provided for various safeguards to the rights of people and interrupted unbridled power or industrialists. But after 2014 and onwards, several ordinances by NDA government have diluted the safeguards. The term public purpose was amended to include private works, section 40 of the act had urgency clause which was widened, SIA was diluted, consent clause was also abolished. The 70th round of NSSO reported that land acquisition of landless, marginal, and small farmers included 92.84% of total acquisitions. These ordinances were obviously a result of lobbying and the right based act was robbed off its nature.[26]

Another downside of this development is seen outside these industrial areas. Outside Jamshedpur industrial area, the situation is grim. Water bodies are extremely polluted, trees are cut, tribal population is adversely hit.[27]

The air quality is also worsening
Sadly, this is also true for Bengaluru electronic city area. When commuting to this area, I happened to personally see the difference. The construction wastes of these areas are dumped outside. The development is so disparate that once EICTA has to advertise it as:
WE have built better overhead highways to reach here, pay and save yourself from underground mess. It was like saying, who has money and good job should get better facilities. The rest do not matter. Is it really the essence of democracy? I do not think so, some people living in golden castles and others bearing the brunt of their comfort. This would never have been the aim of legislators who enacted the new Land acquisition act.

In this article, I have not intended to solve the dilemma of economy versus welfare. It is a debate that has been prominent in academic discourse for centuries. The emergence of Industrial townships has benefitted the country to a great extent. On the same note, it presents various complications that are yet to be resolved.

The essay has focused on a balanced approach to bring out comparison between various models of Industrial township and regulations prevalent in Indian system. Only one thing can be conclusively said, the lives of people are much more important than corporate aims. Insofar as these townships are adversely affecting citizens, legislators should come forward to rectify the situation. Most of these problems can be done away with proper planning and bona-fide legislations.

This is to certify that every word typed in this article is author�s own work. Due credit has been granted wherever third-party help has been reproduced in this article. The plagiarism report has been obtained and it is well-below general norms (approx. 8%). The author is expressly granting permission to Legal Service for copyright purposes.

  1. Sarwar FH, A Comparative Study of Zamindari, Raiyatwari and Mahalwari Land Revenue Settlements: The Colonial Mechanisms of Surplus Extraction in 19 Th Century British India (2012) 2 IOSR Journal of Humanities and Social Science 16 <> accessed on 9th March 2021
  2. The Constitution (Seventy-Fourth Amendment) Act, 1992
  3. Seventh Schedule to the Constitution of India, 1950.
  4. Idiculla M, New Regimes of Private Governance The Case of Electronics City in Peri-Urban Bengaluru Economic and Political Weekly (Delhi, April 23, 2016)
  5. Matthew (n 4)
  6. Sood A, Industrial Townships and the Policy Facilitation of Corporate Urbanisation in India (2015) 52 Urban Studies 1359 <> accessed on 13th March 2021.
  7. Sood (n 6)
  8. Prabhu F (Ministry of Urban Development 2006) rep Urban Studies 52 (8) accessed March 15, 2021
  9. Sood (n 6)
  10. Sood (n 6) pg 1370.
  11. Sood (n 6) pg
  12. Dutta M, Jamshedpur: the growth of the city and its regions, vol 4 (Asiatic Society 1977) Pg. 200-206.
  13. Matthew (n 4) pg 11-12.
  14. Matthew (n 4)
  15. Matthew (n 4)
  16. Saij Gram Panchayat vs State Of Gujarat And Ors, AIR 1999 SC 826.
  17. Solapur MIDC Industries Association Etc. v. State of Maharashtra Ors, 1996 SCC (5) 483.
  18. Matthew (n 6) pg 103.
  19. Brand India (IBEF2020) accessed March 22, 2021
  20. About Electronics City (ELCIA2020) accessed March 12, 2021
  21. Matthew (n 6)
  22. Matthew (n 6) pg. 102.
  23. Gandhinagar Saher Jagrut Nagrik Parishard V State of Gujarat, 2009 SCCOnline Guj 8634 � 7.
  24. Correspondent S, : �KIADB Worse Than a Real Estate Agent, Observes Court <> accessed March 22, 2021.
  25. Delhi PIB (Land Acquisition for Industrial Corridors2019) accessed March 9, 2021
  26. Santosh verma,  Subverting the Land Acquisition Act, 2013 (12 September, 2015) Vol. 37, EPW < > accessed on 15th March 2021.
  27. Uemission team, City � Jamshedpur (Jharkhand, India) - (City � Jamshedpur (Jharkhand, India) July 19, 2020) accessed March 22, 2021

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