INDIA : Make in India and The Indian Realty Sector

The real estate industry to “Make in India” needs buyers from India. The government has announced a deduction for additional interest of Rs. 50,000 per annum for loans up to Rs. 35 lakh, for properties not exceeding 50 lakhs, in the case of first time hom

Prime Minister launched “Make in India” in September 2014 with a view to encouraging both the domestic and multinational companies to manufacture their products in India. Construction and real estate are among the focal points touched by the campaign as more than 8% of the nation’s GDP comes from construction activities.

According to studies, by 2022, there will be a need for 11 crore houses in the country, out of which affordable urban housing constitutes 70%. The tax sops announced in the Union Budget 2016-17 are being considered as a major boost to “Make in India” in the realty sector. The 100% deduction of profits to housing projects with a 30 sq. m size in tier I and 60 sq. m size in tier II cities translated to a 15-20% rise in profits for builders. This should definitely spur growth in the affordable housing segment.

Make in India in the Real Estate Rector
Make in India in the real estate sector has also got a major push through the Smart City concept and AMRUT (Atal Mission for Rejuvenation and Urban Transformation).Together they havebeen allotted a sum of Rs.7296 crores. The current urban infrastructure levels are not enough to meet the needs of a growing urban population. The need is for smart real estate and urban infrastructure. Existing cities need a regeneration of urban space, and Smart cities are being designed to meet the needs of the fresh immigrants to urban areas. The first 20 cities to be developed as Smart Cities have already been announced late last month and the next 40 will be announced in the 2nd phase. As regards AMRUT, the focus is on basic services like drinking water, sewerage, urban transport and other basic amenities meant to improve the quality of life.

Government Supports to Make in India in Realty
Announcement by the government of keeping REITs outside the purview of dividend distribution tax should see more retail investment in the office realty sector, and commercial developers using the option to liquidate. Total REIT listings are expected to touch $18.5 billion. This should lead to more foreign investment too, while we continue to “Make in India”.

The real estate industry to “Make in India” needs buyers from India. The government has announced a deduction for additional interest of Rs. 50,000 per annum for loans up to Rs. 35 lakh, for properties not exceeding 50 lakhs, in the case of first time home buyers. This is bound to lead to more investment, and consequently, more houses being constructed.

For the Indian realty sector at least, “Make in India” is very viable, and after the current budget, a reality more than worth making the effort.

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