Budget is here, so is the wishlist

Squeezed by a severe credit crunch, the Indian realty sector is hoping for better times. The industry is optimistic that the government will provide some relief by easing the FDI policy and providing tax incentives for budget housing in the upcoming Budget for 2012-13.

Venkat K Narayana, executive director, finance & CFO, Prestige Group, feels that increasing the FDI up to 51% in multi-brand retailing would benefit the retail sector as it would increase spending in back-end logistics infrastructure and provide a boost to organised retail.

“The government should allow FDI in smaller real estate projects which are currently excluded from the existing FDI policy on real estate. However, there should be firm regulations to prevent the funds from being re-routed to pay off other developer’s debt or for funding other projects,” said Samir Jasuja, founder and CEO, PropEquity.

Developers also want the Centre to grant an industry status to the real estate sector in the forthcoming budget as it would enable builders easier access to debt funding from banks and financial institutions at more attractive rates. “The industry should be accorded the long-pending status of ‘Industrial Undertaking’ for the purpose of availing long term and short term finances as available to other industries,” added Narayana.

“This would be an important move, since the sector is a major driver for economic growth and generates countless jobs across its various verticals and associated industries,” said Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India. The sector is the second largest employer, next only to to agriculture.

Another key initiative, which the industry feels should be addressed by the government, is the lowering and standardisation of stamp duty across the country, along with reducing transaction burden. According to Brotin Banerjee, MD & CEO, Tata Housing, the introduction of unified taxation system across all states will not only benefit both end users as well as developers, it will also help to incentivise more consumers for home ownership.

There is a huge demand for affordable housing from the mid and low income groups. In order to cater to this need, an extension of tax holiday under section 80IN for Integrated Township development project as Infrastructure project is the need of the hour.

“Last year, a 1% interest rate subsidy was provided for loans towards affordable housing. The scope of this subsidy should be amplified and broadened to include a wider price band of budget housing to benefit home buyers, especially in lower income groups,” suggested Puri.

In order to ease the pressure further, realty players are hopeful of government providing suitable incentives for development of integrated townships.