The Comptroller and Auditor General (CAG) has flagged a financial loss of ₹12.86 crore to the West Bengal Industrial Development Corporation (WBIDC) in its land allotment to Flipkart’s logistics arm, Instakart. The report highlights a deviation from the agency’s own pricing policies during the deal at the Haringhata Industrial Park in Nadia district. WBIDC allotted land to Instakart Services for a regional distribution center, where the corporation calculated the base price of the land without accounting for large water bodies within the project site. This meant the per-acre price was set based on a total area of 358.19 acres, even though a significant portion of that land was unusable for industrial development due to environmental restrictions.
Flipkart’s Haringhata Investment
The Haringhata campus has become central to Flipkart’s presence in the state. It houses the company’s largest fulfilment centre in the country, with 50 lakh cubic feet of storage across six mezzanine levels, inaugurated in 2022. The deal involved a total of 109.12 acres, with Instakart initially seeking 107.35 acres in September 2018 and proposing an investment of ₹991 crore. WBIDC floated an expression of interest in August 2018, fixing the land price at ₹63.49 lakh per acre for a 99-year lease on an as-is-where-is basis.
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The corporation allotted the land in January 2019 and handed over possession in April that year, collecting a total lease premium of ₹69.23 crore. An additional 1.77 acres was allotted later in 2020, bringing the total transaction to ₹82.09 crore on paper, though the actual amount received was lower. The state government defended the pricing approved by the WBIDCL board and Cabinet, stating that the decision to charge ₹63.49 lakh per acre was made after detailed discussion and cleared by the state Cabinet.
Water Bodies Skew Pricing Calculation
Scrutinising the deal, CAG auditors found that the layout plan for the Industrial Park included 55.89 acres of water body that could not be used for industrial development. Consequently, the actual allocable land was only 302.299 acres, not the full 358.19 acres. As per WBIDCL’s own pricing policy, the base price should be arrived at by dividing the acquisition cost plus a 10% administrative charge by the allocable land only.
Recalculated this way, the base price works out to ₹75.23 lakh per acre, against the ₹63.49 lakh per acre actually charged. On this basis, the lease premium payable by Instakart for 109.12 acres should have been ₹82.09 crore, while WBIDCL collected only Rs 69.23 crore, leaving a shortfall of Rs 12.86 crore. The auditor noted that the state government’s reply did not explain the reasons for not following WBIDCL’s own pricing policy. CAG cited the West Bengal Inland Fisheries (Amendment) Act, 1993, which bars filling up water areas for construction without state approval, and a November 2019 Supreme Court order on schemes that extinguish local water bodies.
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The discrepancy highlights a common friction point in large-scale infrastructure development where primary acquisition costs do not account for secondary environmental constraints. When a site includes water bodies that legally cannot be built upon, treating the total acreage as fully productive inflates the value assigned to the remaining land, potentially misleading investors about the true financial footing of a project. It suggests that without strict adherence to valuation guidelines, industrial agencies might inadvertently undervalue their assets or overcharge for land that lacks full utility.
The CAG report, which was tabled in the Assembly on Friday by the BJP government, forms part of the 2024 report on Public Sector Undertakings for the period ending March 31, 2023. This audit comes as the state grapples with a revenue deficit, despite a Gross State Domestic Product (GSDP) growth rate of 9.57% between 2015-16 and 2024-25. The TMC government had not tabled CAG reports for four fiscals prior to this, making this finding a significant moment in the current administration’s oversight record.
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While the state administration maintains that the pricing was a deliberate policy choice, the auditors concluded that the computation of the base price without considering the actual allocable area for development had resulted in the financial loss. The fact that the land was eventually allotted despite the water body restrictions implies that the utility of the remaining land was sufficient for the investor. However, the auditor argued that financial prudence requires valuing land strictly according to its developable footprint, not the total plot area.
The audit serves as a reminder of the strictures placed on industrial development in ecologically sensitive zones. By failing to adjust the lease premium to reflect the non-allocable area, the state agency effectively accepted a lower rate than its internal policies dictated. This ₹12.86 crore gap represents a tangible reduction in state revenue that the auditors argue could have been avoided by strictly adhering to the agency’s own guidelines for land valuation without exception.
