Indian Prime Minister Narendra Modi has agreed to let a temporary executive order, that allowed the government to forcibly buy farmland for industrial development, to lapse.
Modi announced this during a regular address to the nation on the radio on Sunday.
“We are ready to amend land acquisition act to benefit farmers… I have decided that the Land ordinance be allowed to lapse,” said the Indian Prime Minister on Sunday.
The executive order will lapse on August 31.
The Indian government had reissued the order thrice, and each time it lapsed without parliamentary approval.
Modi has already agreed to drop politically unpopular clauses from a pro-business land bill after failing to garner wider support for the measure, lawmakers of the ruling Bharatiya Janata Party (BJP) said earlier this month.
An executive order has a life span of six months otherwise, has to be re-promulgated if it does not get the endorsement of Parliament within six weeks of the start of a session.
A law brought in by the previous government had placed restrictions on buying land, and strived to provide fair compensation to landowners and outlined measures to rehabilitate those affected by land sales.
The law, “Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Law 2013” passed by the Indian Parliament gave landowners the right to greater compensation but potentially raised costs for businesses and government.
The Modi government aimed to overhaul the 2013 law that would also remove a requirement to get 80 per cent of the landholders’ consent in the case of projects in defence, rural electrification, rural housing and industrial corridors.
Modi had made land reforms a central plank of his economic agenda. Activists and opposition parties say the bill is anti-farmer and the Indian National Congress Party has rallied support to block it in the upper house of parliament for months.
As the second largest growing economy in the world expands there have been increasing concerns for a rural populace that are being forced to sell their land for industrial and commercial use.
The 2013 legislation had ensured that buyers pay four times the market value for land earmarked for infrastructure projects in rural areas.
Earlier in July 2013, global steel major POSCO had to pull out of a $5.3 billion steel mill project in India.
Land acquisition is a contentious issue in India, where small holdings by families with no source of income other than farming are common.