Developers Demand Industry Status For Real Estate In Budget. How Will It Change The Sector?

Recently, the National Real Estate Development Council (NAREDCO) demanded that the government grant industry status to real estate sector, apart from setting up a single-window clearance mechanism in the upcoming Budget Session of Parliament. The NAREDCO statement said that an industry status would bring about major transformation in the sector outlook. Most industry rules and regulations were applicable to the sector and a dissimilar approach towards funding purposes would amount to discrimination, the statement argued.

This is not the first time when the sector has demanded for an industry status . So what does an industry status mean for the sector and how would it affect the sector?

Taking to PropGuide, Experion Developers Chief Executive Officer Rakesh Kaul said, “First of all, from a financial aspect, an industry status will imply that the provisioning norms for lending will change. The limits set for banks to lend for the sector will increase. Which will imply there will be more funds at cheaper rates and an increased fund supply for the construction business.”

Kaul added that there could be a single body representing the needs and issues of the entire sector and, hence, unifying all the different bodies at a pan-India level.

Another thing which could be a reality in realty is the concept of a regulator, which will decide the framework and will bring in more transparency. This would also open the doors for external funds waiting to flow into India, Kaul said.

Also Read: Budget 2016: Financial Shield Against Project Delays May Bring Some Cheer For Home Buyers

NAREDCO President Parveen Jain had recently said that the industry status would attract large companies and inculcate corporate culture and industry discipline which would benefit economy in general and consumers in particular. A industry status will also help the sector access bank lending at average interest rates at low collateral as against high risk rates prevailing at present. Further, it will help sector access central / state subsidies in case developers are building in backward regions / north-eastern regions and raise ECBs, the NAREDCO statement added.

Puranik Builders Managing Director Shailesh Puranik wrote in his column in ET Realty that once recognised as an industry, the sector will become one of the true indicators of the country's economy. And, considering its lion's share in the gross domestic product (GDP) , the sector might receive priority in allocations, he added.

Here is what Rakesh Kaul, CEO, Experion Developers Pvt Ltd, has to say:

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