Several major industrial land deals are currently facing delays due to disputes arising over land price escalation clauses embedded in agreements. These clauses allow sellers or authorities to increase land prices over time, often tied to market indices, inflation rates, or regulatory revisions. Buyers are contesting the ambiguity and frequency of such escalations, arguing that they disrupt financial planning and make large-scale projects riskier. In many cases, escalation percentages are perceived as excessive or arbitrary, leading to a breakdown in trust between parties. The uncertainty over final land costs has stalled negotiations and delayed project kick-offs. Industrial corridors expected to drive regional growth are especially impacted by these standoffs.

Both private developers and government agencies face criticism for inserting open-ended escalation clauses without clear capping mechanisms or transparent calculation formulas. Buyers, particularly large manufacturing firms, seek predictability and cost certainty to secure project funding and board approvals. In response, many buyers are demanding pre-agreed escalation limits, longer lock-in periods, or complete removal of escalation clauses in fresh contracts. Sellers, on the other hand, argue that future cost escalations in infrastructure, compliance, and inflation justify flexible pricing. As a result, negotiations are becoming increasingly legalistic, with multiple rounds of draft agreements and legal consultations. The impasse is causing significant opportunity costs for both sides.

To resolve these disputes, stakeholders are exploring new contract models that balance risk sharing and price stability. Some proposals include milestone-based price adjustments, where escalations occur only after specific infrastructure developments or regulatory clearances. Others suggest linking escalation strictly to verifiable indices like the Consumer Price Index (CPI) with capped rates. Industrial associations are also advocating for standardization of escalation clauses to avoid case-by-case conflicts. If unresolved, prolonged disputes could undermine investor sentiment in industrial real estate markets and derail critical manufacturing expansion plans. Transparent and fair land pricing frameworks are essential to sustaining momentum in the industrial sector’s growth trajectory.