Acquisition of Industrial Land in Proximity to Port Areas in India

In March 2025, ArcelorMittal Nippon Steel India (AM/NS India), the joint venture through which Nippon Steel operates in India, secured land in Andhra Pradesh for a new integrated steel mill with a crude-steel capacity of approximately 7 million tonnes per annum. The facility has been established within the Nakkapalli cluster of Anakapalli district, near Rajayyapeta and close to the coastline, forming part of the Visakhapatnam–Chennai Industrial Corridor. 

The principal advantage of the location lies in its coastal positioning. The example also serves to underline the points: a project of this character is viable in the coastal zone by reason of its waterfront orientation and its development through allotment of government-acquired land, and remains, subject to the applicable Coastal Regulation Zone and clearance requirements, which we would address in the framework discussed below. 

Regulatory Overview 

The acquisition of industrial land in the vicinity of a major Indian port is permissible and is, in fact, actively encouraged under the Government of India’s longstanding policy of port-led industrialisation. It seeks to situate manufacturing and warehousing capacity close to the coast to strengthen the efficiency of global supply chains. However, such acquisition is, subject to a structured regulatory framework i.e. the manner of acquisition, the uses to which the land may lawfully be put, and the minimum distance that must be maintained from the shoreline are each governed by specific statutory and administrative requirements. In broad terms, industrial land near a port may be acquired through one of two channels.

Allotment by a Government Authority (Leasehold)

• Land situated immediately adjacent to a port is, in most instances, held and administered by port authorities or state-level industrial development corporations, and is not ordinarily available for direct purchase. The prospective acquirer is required to submit a formal business proposal setting out the proposed industrial activity, the anticipated generation of employment, and the extent of land sought. 
   

• As a rule, granted on a long-term leasehold basis rather than by way of an outright transfer of title, with tenures commonly ranging from 30 to 99 years. The acquirer thereby obtains rights of possession and development, while title remains vested in the allotting authority.
   

• Prospective acquirers may also wish to consider an allotment within a Special Economic Zone (SEZ) or a Free Trade Warehousing Zone (FTWZ), each of which confers meaningful benefits upon import and export operations, including duty-free import, relief from the Goods and Services Tax (GST), and streamlined customs procedures. 
   

Acquisition in the Private Market (Freehold)

Where a prospective acquirer does not qualify for a government lease, or prefers to hold absolute title, freehold land may be acquired in the private market. Such land is generally purchased from private owners or industrial-park developers situated within the port’s hinterland, typically within a radius of approximately 10 to 30 kilometres. Acquisition is ordinarily facilitated through local industrial real-estate intermediaries. The principal advantage of this channel lies in the acquisition of absolute ownership, free from the tenure limitations and renewal obligations attendant upon a leasehold interest.

Essential Due Diligence Prior to Acquisition

Verification of zoning and permitted land use. The plot must be expressly designated for industrial use by the competent local planning authority. Where the land remains classified as agricultural, a Change of Land Use (CLU) certificate must be lawfully obtained before any development is commenced.

Examination of title and ownership. Given the rapid pace of development in port areas and the consequent prevalence of ownership disputes, it is strongly advisable to engage local legal counsel to obtain an Encumbrance Certificate and to confirm that the title is clear and unencumbered by any pending litigation.

Assessment of coastal regulation. Land in proximity to the sea is governed by the Coastal Regulation Zone (CRZ) framework, the requirements of which may materially affect, or indeed preclude, a proposed project. Acquirers are accordingly advised to confirm, in advance, that the intended activity is permissible at the relevant distance from the shoreline.

Compliance with the Coastal Regulation Zone Framework

The CRZ framework is directed at the conservation of fragile coastal ecosystems and regulates permissible activity by reference to proximity to the High Tide Line (HTL). The following matters warrant particular attention.

• Restriction on New Industry

The establishment of new industries, and the expansion of existing industries, operations or processes, constitutes a prohibited activity within CRZ areas. The limited exception extends only to projects that require direct access to the waterfront or foreshore - such as ports, harbours, jetties and fish-processing units. It should be emphasised that this restriction applies to industry generally, and not merely to polluting industry; an installation does not qualify for exemption by reason of being non-polluting.

• No Development Zone

A No Development Zone (NDZ) extends landward from the High Tide Line, the width of which varies according to the applicable classification:

CRZ-I (ecologically sensitive areas, including mangroves, coral reefs and intertidal zones): no industrial construction is permitted.
CRZ-III B (rural areas of lower population density): an NDZ of 200 metres from the HTL.
CRZ-III A (rural areas of higher population density): an NDZ of 50 metres from the HTL, applicable only where the relevant state’s Coastal Zone Management Plan has been approved under the 2019 notification; until such approval is granted, the 200-metre NDZ continues to apply.

• Prohibition on the Discharge of Waste

The discharge of industrial effluent, chemical waste or untreated sewage into coastal waters is prohibited. Where a proposed process generates liquid or hazardous waste, an operating permit is unlikely to be granted, with the result that a plot within a CRZ area would be unsuitable for such activity.

• Restrictions on Hazardous Materials

The handling, storage and disposal of hazardous substances within the coastal zone is prohibited. The narrow exceptions relate to the receipt and storage of petroleum products and liquefied natural gas (LNG) near port limits, subject to audited safety conditions, and to the transfer of hazardous cargo between ships and ports or refineries within the port area.

• Clearance Requirements and the Risk of Demolition

The approval of factory layouts by local town-planning departments is contingent upon clearance from the State Coastal Zone Management Authority (SCZMA). It should further be noted that the National Green Tribunal and the Supreme Court of India have, on occasion, ordered the demolition of structures found to be in breach of the prescribed buffers. Acquisition undertaken without reference to a verified Coastal Zone Management Plan therefore carries a material financial risk.

• Preliminary Considerations

  In order properly to assess a particular proposal, it would be helpful to ascertain the following:
  the port at which acquisition is contemplated;
  the distance of the plot from the shoreline;
  the nature of the intended industrial activity (for instance, heavy manufacturing, cold storage or logistics warehousing);
       whether a government lease or a private freehold acquisition is preferred;
       the chemicals or raw materials proposed to be handled at the facility; and
       whether the proposed location falls within the formal boundary of a notified  port.

  A considered response to these matters will materially clarify both the appropriate course of action and the regulatory considerations that attend it.
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  Authored by:
  Himanshu Srivastava