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The Comptroller and Auditor General of India (CAG) has found that Adani Defence Systems and Technologies Limited (ADSTL) was extended an “undue benefit” of Rs 34.6 crore in the form of discounted land prices by the Telangana government in 2018, when the Bharat Rashtra Samithi (BRS) was in power.
According to the latest CAG report presented in the Assembly on March 30, Adani Defence Systems had requested concessional allotment of 50 acres of land in the Hardware Park at Mamidipally.
In March 2018, a Cabinet Sub-Committee (CSC) constituted to finalise the customised benefits to be extended to mega projects agreed to the discount if the project was shifted to to the new Aerospace Park at Kongarkallan, according to CAG.
However, within three months, in June 2018, the Telangana State Industrial Infrastructure Corporation Limited (TSIIC) allotted 20 acres of land at the initial location at Mamidipally at a discounted price of Rs 40 lakh per acre against the prevailing rate of Rs 2.13 crore per acre, the report said.
Adani Defence Systems was given 20 acres of land at a discounted rate of Rs 8 crore against a market rate of Rs 42.6 crore.
“Thus, the Industries and Commerce (I&C) Department violated the Cabinet Sub-Committee’s decision and extended an undue benefit of Rs 34.60 crore to the Adani Defence Systems and Technologies Limited (ADSTL),” the CAG report said.
TSIIC responded by saying the concession was given because of the firm’s “strategic importance for the defence sector”, while the BRS government replied in October 2023 that the request was considered “in order to utilise the resumed land and structures.”
The CAG report found these replies unacceptable, saying the allotment went against the Cabinet Sub-Committee’s decision.
Among other departments, CAG audited the TSIIC’s activities from 2014 to 2022, mainly involving acquisition and allotment of land to private parties for various projects.
At the Hyderabad Pharma City, which is meant to be a cluster of pharmaceutical companies, the audit found that TSIIC made the first allotment of 48 acres of land in January 2020 to Amazon Data Services India, to establish a data centre in five phases.
The CAG audit noted that allotting land for a data centre was a deviation from the pharma city’s purpose. “The target of generation of direct employment for 1.66 lakh people at the Hyderabad Pharma City was also jeopardised since the employment potential of a data centre was very minimal,” the report said.
“During 2014-15 to 2021-22, TSIIC made 2,355 allotments involving 4,050 acres (both developed and undeveloped) valued at Rs 2,811.06 crore. These allotments were expected to generate investment of Rs 32,566 crore and employment to 1.71 lakh people,” the report said.
The audit found that from March 2018 to March 2022, the Consultative Committee on Electronic System Design & Manufacturing (CCESD&M) constituted by the state government allotted 165.21 acres to 39 Electronic Hardware units at concessional rates of Rs 60 to 90 lakh per acre, “against the prevailing land and development cost ranging from Rs 158.64 lakh per acre to Rs 214.48 lakh per acre.”
These allotments were made by the Committee beyond the scope of its powers and “resulted in a loss of Rs 208.24 crore to the state exchequer besides extension of undue benefit to the allottees,” the report said.
The audit also found that TSIIC allotted 511 acres at the National Investment and Manufacturing Zone (NIMZ) in Zaheerabad against the evaluated land requirement of 49 acre at a concessional rate, “resulting in revenue loss to TSIIC and extension of undue benefit to the aerospace and defence company Vem Technologies Private Limited (VTPL) to the tune of Rs 106.91 crore.
In the Gachibowli Industrial Park of TSIIC, the audit found that an acre of land whose market value was Rs 14.52 crore was given to mobile manufacturing company Micromax at Rs 10.05 crore. Another 2.68 acres of prime land at IP, Gachibowli, was further allotted to three more mobile manufacturing companies at a similar concession. Three of the allottees, Micromax, Celkon and Karbon, hadn’t established their units even five years later as of December 2022. Yet, TSIIC had “neither levied the applicable penalty of Rs 1.60 crore nor resumed their premises,” the report found.
Similar irregularities in allotments were noted in the Industrial Parks at Chandanvelly and Kothur, and the plastics park at Mankhal.