Gauging impact of India’s new land acquisition law on Chinese companies

A majority of large Chinese companies that invest in India are involved in the construction or infrastructure sectors. These are also the sectors in which India needs maximum participation from Chinese companies. As such, it is very important for Chinese companies to understand the implications of the recently enacted law relating to land acquisition in India. In this article, we provide a brief overview of the legislation and explain the significance of important provisions.

The new law is based on The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill, 2012. It received the assent of both houses of the Indian parliament and will replace the Land Acquisition Act, 1894.

Appropriation of land

The new act allows for appropriation of land for any “public purpose”, such as strategic defence purposes and national security, accommodation of project-affected people, roads, railways, highways and ports built by the government and public sector enterprises, etc. This includes the following categories of infrastructure projects: a) projects benefiting the general public, where the project is owned and at least 51% of it is funded by the public exchequer; b) public private partnerships with the prior informed consent of at least 70% of people affected by the project; and c) private companies with the prior informed consent of at least 80% of people affected by the project.

Santosh Pai and Vikas Kumar are partners at D H Law Associates. D H Law Associates is the only full-service Indian law firm with an active China practice since 2010