Gujarat industrial land prices are unsustainable for manufacturing: Founder shares pain of setting up plant
A plot in my GIDC estate runs ₹5,000 to ₹7,000 per square foot. A functioning factory building outside Detroit trades around ₹1,200 per square foot, says Titan Additive founder Maahir Panchal
- Aug 26, 2026,
- Updated Aug 26, 2026 4:56 PM IST
Indian manufacturing does not lack capacity. It lacks the space and conditions to grow, according to Maahir Panchal, founder of Gujarat-based engineering and manufacturing company Titan Additive.
In a post on X on Monday, Panchal said high industrial land prices were making it difficult for factories to expand and invest in better equipment.
"Current land prices are unsustainable for manufacturing," he wrote, citing conversations with industrialists.
Panchal said India imported about ₹20,000 crore worth of machine tools last year, with imported equipment accounting for 60% to 65% of everything installed.
"The better our factories performed, the more we imported. That is the whole problem, and it is not the one America has," he wrote.
Must Read: Scaling up India's manufacturing ambitions
The founder contrasted India's manufacturing landscape with a problem described by an American engineer, who complained that he could not find vendors with the capacity to make his parts.
Panchal said his experience was almost the opposite.
"I can find a hundred shops within forty kilometres of my gate who will make almost anything I draw," he wrote. They can quote within hours, he said, and many offer lower prices than expected.
But, he said, these businesses rarely grow significantly.
"That is the Indian manufacturing problem. Not absence. Not incapacity. We have capacity in enormous quantity, distributed in the worst possible shape, on a floor that never rises."
He described India as "a nation of job shops that never became a nation of companies".
Panchal also argued that India remains heavily dependent on foreign equipment, steel, designs, and brands for much of its manufacturing.
"A large part of what we celebrate as Indian manufacturing is Indian labour applied to foreign machines, cutting foreign steel, to foreign drawings, under a foreign brand, at the last 15% of the value chain," he wrote. "That is a start. It is not the thing itself."
Don't Miss: Apple may manufacture iPads, MacBooks in India, but local components take priority
Why Land Costs Matter
The entrepreneur said land prices are a bigger problem than the commonly discussed shortage of labour.
He said a plot in his GIDC (Gujarat Industrial Development Corporation) industrial estate in a tier-2 city costs ₹5,000 to ₹7,000 per square foot.
By comparison, he said, a functioning factory building outside Detroit trades at around ₹1,200 per square foot. "I have checked this more than once because the first time I assumed I had misread a decimal."
"American land, American power, American compliance, and their floor space costs a fifth of ours," Panchal wrote.
He said the cost of land forces manufacturers to build smaller factories, which then limits how efficiently they can operate.
Expensive land can mean tighter layouts, no space for internal crane bays, and raw materials being stored outside, he said.
"You never build the extra bay for the machine you will buy in year six, so in year six you buy a smaller machine, or you buy nothing," Panchal wrote.
He argued that affordable industrial land should be treated as a way to improve productivity rather than as a subsidy.
"Cheap land is not a subsidy. It is permission to be inefficient in the one dimension where inefficiency compounds into productivity," he said.
‘An Industrial Plot Should Not Be An Appreciating Asset’
Panchal welcomed Gujarat's move to notify new industrial estates but said the bigger issue was the price of the land. "An industrial plot should not be an appreciating asset," he said, adding that once factory land becomes primarily a real estate investment, owners can have an incentive to sell rather than expand production.
"The moment a shed becomes a real estate position, the man holding it stops thinking about output per square foot and starts thinking about exit," he said.
The startup founder further said he knew people who had made more money selling their industrial plot than running a business on it for two decades. "They are not fools. The system paid them to stop manufacturing," he said.
Sridhar Vembu Backs Land Concern
Zoho founder Sridhar Vembu reacted to Panchal's post, calling it "a great read on the issues facing manufacturing in India".
Vembu said semi-urban land and land with access to highways and logistics were too expensive, adding that high land prices also affect the middle class and the poor.
He also pointed to high interest rates as another barrier to manufacturing investment.
"High interest rates make it difficult to justify investing in latest machines," Vembu said. "Our destiny as a nation of manufacturers depends on fixing both issues."
For land, Vembu suggested building highways and railway infrastructure before development, arguing that this could encourage factories and people to move to new areas. "Highway and railway construction should precede development."
To address financing costs, he suggested encouraging local pools of capital through a new type of NBFC that could use profit-sharing and allow pre-tax reinvestment of profits within the pool.
Indian manufacturing does not lack capacity. It lacks the space and conditions to grow, according to Maahir Panchal, founder of Gujarat-based engineering and manufacturing company Titan Additive.
In a post on X on Monday, Panchal said high industrial land prices were making it difficult for factories to expand and invest in better equipment.
"Current land prices are unsustainable for manufacturing," he wrote, citing conversations with industrialists.
Panchal said India imported about ₹20,000 crore worth of machine tools last year, with imported equipment accounting for 60% to 65% of everything installed.
"The better our factories performed, the more we imported. That is the whole problem, and it is not the one America has," he wrote.
Must Read: Scaling up India's manufacturing ambitions
The founder contrasted India's manufacturing landscape with a problem described by an American engineer, who complained that he could not find vendors with the capacity to make his parts.
Panchal said his experience was almost the opposite.
"I can find a hundred shops within forty kilometres of my gate who will make almost anything I draw," he wrote. They can quote within hours, he said, and many offer lower prices than expected.
But, he said, these businesses rarely grow significantly.
"That is the Indian manufacturing problem. Not absence. Not incapacity. We have capacity in enormous quantity, distributed in the worst possible shape, on a floor that never rises."
He described India as "a nation of job shops that never became a nation of companies".
Panchal also argued that India remains heavily dependent on foreign equipment, steel, designs, and brands for much of its manufacturing.
"A large part of what we celebrate as Indian manufacturing is Indian labour applied to foreign machines, cutting foreign steel, to foreign drawings, under a foreign brand, at the last 15% of the value chain," he wrote. "That is a start. It is not the thing itself."
Don't Miss: Apple may manufacture iPads, MacBooks in India, but local components take priority
Why Land Costs Matter
The entrepreneur said land prices are a bigger problem than the commonly discussed shortage of labour.
He said a plot in his GIDC (Gujarat Industrial Development Corporation) industrial estate in a tier-2 city costs ₹5,000 to ₹7,000 per square foot.
By comparison, he said, a functioning factory building outside Detroit trades at around ₹1,200 per square foot. "I have checked this more than once because the first time I assumed I had misread a decimal."
"American land, American power, American compliance, and their floor space costs a fifth of ours," Panchal wrote.
He said the cost of land forces manufacturers to build smaller factories, which then limits how efficiently they can operate.
Expensive land can mean tighter layouts, no space for internal crane bays, and raw materials being stored outside, he said.
"You never build the extra bay for the machine you will buy in year six, so in year six you buy a smaller machine, or you buy nothing," Panchal wrote.
He argued that affordable industrial land should be treated as a way to improve productivity rather than as a subsidy.
"Cheap land is not a subsidy. It is permission to be inefficient in the one dimension where inefficiency compounds into productivity," he said.
‘An Industrial Plot Should Not Be An Appreciating Asset’
Panchal welcomed Gujarat's move to notify new industrial estates but said the bigger issue was the price of the land. "An industrial plot should not be an appreciating asset," he said, adding that once factory land becomes primarily a real estate investment, owners can have an incentive to sell rather than expand production.
"The moment a shed becomes a real estate position, the man holding it stops thinking about output per square foot and starts thinking about exit," he said.
The startup founder further said he knew people who had made more money selling their industrial plot than running a business on it for two decades. "They are not fools. The system paid them to stop manufacturing," he said.
Sridhar Vembu Backs Land Concern
Zoho founder Sridhar Vembu reacted to Panchal's post, calling it "a great read on the issues facing manufacturing in India".
Vembu said semi-urban land and land with access to highways and logistics were too expensive, adding that high land prices also affect the middle class and the poor.
He also pointed to high interest rates as another barrier to manufacturing investment.
"High interest rates make it difficult to justify investing in latest machines," Vembu said. "Our destiny as a nation of manufacturers depends on fixing both issues."
For land, Vembu suggested building highways and railway infrastructure before development, arguing that this could encourage factories and people to move to new areas. "Highway and railway construction should precede development."
To address financing costs, he suggested encouraging local pools of capital through a new type of NBFC that could use profit-sharing and allow pre-tax reinvestment of profits within the pool.