Zaheerabad Industrial Smart City: Land Acquisition, Compensation & Village Coverage

Acquisition model: consent purchase, later contested in court

Zaheerabad's land was not acquired under the standard Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (RFCTLARR) Act, 2013 process. In 2015, the government announced the establishment of NIMZ in Zaheerabad and issued G.O.Ms.No.123, which was issued for procurement of the land from the willing land owners and others by the procuring agency for public purpose. This made it a negotiated, consent-based "purchase" scheme rather than a compulsory acquisition with the full rehabilitation package the 2013 Act mandates.

The scheme was legally challenged almost immediately. A single-judge bench of the High Court quashed GO 123, issued on July 30, 2015, holding that the government is not a private property dealer and that the state cannot bypass the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. The Telangana government challenged the judgment, after which the bench stayed the operation of the single judge's order. In parallel, in 2017, the government issued G.O.Ms.No.53, exempting NIMZ from certain provisions of the RFCTLARR Act, 2013.

The consent process itself worked by inviting landholders to submit forms agreeing to part with their land, after which the government issued show-cause notices and resumed the land. Assigned landholders expressed their willingness to part with their lands and submitted the necessary forms; they received show-cause notices for resumption, and in 2016 the government resumed the land and handed it over to the Telangana State Industrial Infrastructure Corporation (TSIIC), with revenue records mutated to reflect the change in ownership. As recently as August 2024, procedural gaps resurfaced: the Telangana High Court on 30 August 2024 issued notices to farmers following its directive to restart the acquisition process with a proper hearing of farmer objections, nullifying earlier acquisition notifications, though the land acquisition process is yet to be completed.

Compensation rates — a moving, contested number

The gap between ex-gratia and open-market rates has been the central grievance. Petitioners, as assigned landholders, received ex-gratia payments of ₹4,00,000 per acre for cultivated land and ₹3,25,000 per acre for fallow land — significantly lower than the ₹5,65,000 per acre given to private patta landowners. The Telangana High Court ended that gap: the court ordered that petitioners are entitled to receive ex-gratia on par with private patta holders in their respective villages at ₹5,65,000 per acre, with the government and TSIIC directed to pay the differential amount.

Separately, farmers organised under a group opposing the project argued the offer was far below market value. The TSIIC was offering compensation of ₹7 to 9 lakh per acre whereas the market value was about ₹25 lakh per acre, farmers said, and by 2021 land rates had skyrocketed after the proposed NIMZ, with the market rate reaching about ₹20 lakh and above per acre even in interior areas. Officials have periodically pushed for higher payouts: the state minister asked district authorities to ensure that those losing lands to NIMZ are adequately compensated, saying, "If possible, pay them more compensation by going out of the way."

Villages covered (Sangareddy district)

All notified land falls in one district — Sangareddy — split across two mandals. The Zaheerabad Industrial Node spans 12,635 acres across 17 villages in Sangareddy District, Telangana. An official land-records breakdown lists the villages as: Ganeshpur, Husselli, Ganjoti, Mungi, Rukmapur, Hadnur, Namtabad, Mamidgi, Kalbemal, Basanthpur, Metalkunta, Gangwar, Rejinthal and Malkanpahad villages of Nyalkal Mandal and Chilepalle, Yelgoi and Bardipur villages of Jharasangam Mandal, Sangareddy District.

Phase 1 construction is concentrated in a smaller subset of these villages. Villages such as Bardipur, Yelgoi, Chillapalli, Chillapalli Thanda and parts of Nyalkal mandal are part of NIMZ. Land ownership within the notified footprint is mixed: an early tally put 8,773 acres of land as Patta (private) Land, with the remainder government land, while a later Environmental Impact Assessment figure put the acquisition requirement differently — TSIIC had to acquire 9,710 acres of land, of which 7,461 acres was private land, according to the EIA/EMP report.

Budget allocated

Phase 1 infrastructure carries a defined project cost. The project is estimated to cost ₹2,369 crore, with TGIIC holding a 51 percent equity stake worth ₹620.96 crore and NICDIT contributing 49 percent, valued at ₹596 crore. The Centre contributes 49% and Telangana 51% of the first-phase cost, which will fund core industrial infrastructure including ₹596.61 crore of smart infrastructure and a dedicated road project costing ₹100 crore.

Separately, an earlier full-NIMZ costing (spanning the whole 12,635-acre footprint, not just Phase 1) put the figure higher: TSIIC's establishment of the NIMZ over 12,635 acres carries a total project cost of ₹3,095 crore, expected to generate direct and indirect employment for over 2.6 lakh persons. A 2024 ministerial statement cited a much larger, longer-horizon figure: the government was investing ₹50,000 crore for the NIMZ and expected to get ₹1.20 lakh crore in income from it, apart from creating employment for 2.5 lakh people. These are not directly comparable — the ₹2,369 crore figure is public infrastructure spend for Phase 1 only, while the ₹50,000 crore figure appears to bundle in anticipated private industrial investment (Hyundai, Triton Electric, VEM Technologies and others).

Disputes and farmer negotiations

Opposition has run alongside the project since its 2015 announcement. Farmers in the 17 villages under Nyalkal and Jharasangam mandals have been opposing the project and have held several protest demonstrations since its announcement, with the project likely to affect the livelihood of over 5,000 farmers and impact over 10,000 people. Farmers formed a group named 'NIMZ Rythula Poratha Samithi' to lead the protests against forceful land acquisition.

A June 2022 foundation-stone event for VEM Technologies turned tense. Farmers staged a protest demanding fair compensation for lands acquired for NIMZ; police used mild force, and a couple of farmers were injured after a baton charge to disperse protestors. Survey work has also been physically stalled: farmers of Chilapally, Chilapally tanda, Bardipur and Yelgoi villages stalled survey works by officials demanding more compensation.

A January 2021 public hearing drew similar resistance. Tension prevailed at Bardipur village when farmers and other villagers were arrested by police during protests at the public hearing, and farmers alleged they were not allowed to participate, with police setting up five check posts on the roads leading to the venue. Activists have also pushed for a much higher compensation formula: the Telangana State Land Evacuees Association argued that to ensure fair acquisition, each acre of land should be given compensation seven times higher than the market price.

Compensation-parity litigation by assigned landholders eventually succeeded. In 2018 and 2023 the petitioners filed writ petitions challenging the acquisition process and demanding compensation on par with private landowners, arguing the acquisition bypassed due process under the 2013 Act and that differential compensation was discriminatory. The High Court found the differential compensation discriminatory and ordered the government and TSIIC to pay the differential amount with accrued interest, without setting aside the entire acquisition.

Current stage (as of April 2026)

After years of stop-start progress, execution has visibly accelerated. The Smart Integrated Industrial City (SIIC) in the NIMZ at Zaheerabad has finally commenced, 13 years after the project was first announced by the Centre in 2013. Revenue officials have completed a detailed survey of the 3,245 acres earmarked for the first phase and have fixed boundaries to facilitate handover of the land to SRR Projects, the appointed infrastructure contractor. In a March 2026 review meeting, the district collector confirmed SRR Constructions would take over the basic infrastructure work, noting that although farmers had sold their lands to the government, they had been allowed to continue cultivating crops due to the prolonged delay in work, and instructed officials to survey without disturbing the ongoing Rabi season.

That grace period is now ending. Land for the project had been acquired from farmers several years ago, but they were permitted to continue cultivation due to delays in execution; officials have now made clear that no farming activity will be allowed once the ongoing Rabi season concludes. Progress is being tracked closely at the district level: Sangareddy district collector P. Pravinya is regularly holding review meetings with officials to assess the progress of NIMZ works.

As of mid-2025, official acquisition figures for the wider 12,635-acre footprint stood at: 91% of the land under state possession, with acquisition underway for the remaining 284.48 acres. A slightly later figure from the district administration put the broader mandal-wide total at: 7,300 acres acquired out of the 12,630 acres required in Nyalkal and Jharasangam mandals. Anchor investors are already committed on already-acquired land: Hyundai, Triton Electric and VEM Technologies have together promised investment of more than ₹14,000 crore, with Hyundai's Global Innovation Research and Development Centre coming up on 675 acres at an investment of ₹8,528 crore.