Well, I though it was this way everywhere in the world. In Europe, at least, you cannot build anything on agricultural land unless it is a n agricultural structure or you get the classification changed, which is not easy.
My father's has an orange field, so at some point he wanted to dig a well to get some water.
He went to the City Hall, got all the tricky paperwork and applied for permission to build it. Months passed by without hearing anything, and at some point he just forgot about it, assuming he'd be denied silently. There's some people in the city hall don't like him too much BTW.
Few years later an official from the government came, "I'm here to check on the well you built", to which my father was of course confused "what well? You never gave me permission to dig it!". Apparently and according to this official, the normal thing to do is that you apply for permission, then build the project and finally then you'll receive the permission eventually, so he'd assumed my father had the well built already. Since as mentioned some people were against him, he was also not gonna officially break the law and build it before getting permission.
Completely legal, but a good illustration of how even our new (and honestly much improved) zoning is too restrictive.
What seems overly complex and inefficient is the amount of permissions and the subpermissions.
Even to my German bueorcracy adjusted ears this sounds like a great way to extract bribes and fees. At least the process here is quite clear (but not always fast)
53% of India's land area is arable land: 790 people per square kilometer of arable land, or 1270 square meters of arable land per person. I feel like 100 square meters of factory area per person is more than adequate, which would decrease the arable land by some 8% if you built it all on previously cultivated fields, rather than mountains or forests or deserts (or polders!); but that assumes you're employing the entire population in the factories.
Some factories do have lower density than that; for example, https://en.wikipedia.org/wiki/NUMMI was 370 acres (150 hectares in modern units) and employed 5500 people at its closure in 02006. This works out to 270 square meters per worker. But now https://en.wikipedia.org/wiki/Tesla_Fremont_Factory occupies that space and some additional (175 hectares total) and employs 22000 people, 80 square meters per person, despite extensive automation.
If some of those factories are producing fertilizers, tractors, irrigation equipment, and food products, converting some fields into factories might actually increase your agricultural production rather than decreasing it. Germany harvests 7 tonnes of cereals per hectare that's planted in cereals; India, despite being tropical, harvests only 3.3: https://tradingeconomics.com/india/cereal-yield-kg-per-hecta...
Allocating scarce resources like land by means of capitalism is maybe not ideal unless you can make more of them (polders!), but it does seem to work better than allocating them by bureaucracy and laws.
All this does is creates a set of entrenched local businesses which run hand-in-hand very transparently with local political interests. This is the whole reason Western folks never understand why China succeeded so fast, it is because they made the trade-offs necessary for growth. For rapid growth you cannot make everyone happy right away.
The good thing about India is that e-Governance initiatives have at least provided some transparency and understanding for the average person which did not exist before.
And then of course you can't just build on it. You may attempt to reclassify it into building land but from TFA it seems the process is just as tedious as in India and definietely not guaranteed to succeed.
Theres a big chance, once you get to the building, you will have to monitor the builders constantly otherwise they rob you blind. From my friend in India I was told they have the same problem.
I didn't say the goverment is schizofrenic, but their message certainly plays on xenophobic fears. Its clearly a part of a populist agenda, because we need people with capital buying up land, but its super easy to frame this as a malevolent action to less educated people, and that is what is being done for purely political reasons. And this policy is exactly what I would call "overly prohibiting": I can't sell my farmland even to local farmers who live a few miles away cause they happen to be in a different couty. Cmon thats just stupid.
Then you probably need a building permit, but they usually just need the plans for the building to be built for that.
I think in the US this is called Zoning and you need Zoning permissions or something similar.