Emphasis is on creating global standard infrastructure
NEW DELHI: The Union Commerce and Industry Minister, Kamal Nath, on Monday called for cut in duties and taxes on building materials to give a further boost to the construction industry. He also asked the private sector, specially the foreign developers, to increase their participation in the growth of Indian real estate sector.
“The real estate sector symbolises the changing face of India and clearly showcases the robust growth in the Indian economy,” he said while addressing the “National convention-real estate for all” organised by the Confederation of Real Estate Developer’s Association of India (CREDAI) here.
“With the economy on an upswing, the emphasis and requirement today is on creating international standard infrastructure and housing facility to sustain the growth rate projected in the XI Plan. The real estate development sector has the capacity to pay for itself without straining the limited resources of the State government,” Mr. Kamal Nath said.
“We have already opened the construction development sector for foreign direct investment (FDI) and the policy permits wholly-owned subsidiary in this sector in India by a foreign company. Of course, there are conditions regarding minimum area for development and minimum capitalisation to be brought in by the foreign investor. A number of global players have entered the Indian market and many more have shown interest. Growth and investment have also created opportunities for investment in the real estate sector,” he added.
Mr. Kamal Nath said while the role of the government was expected to be primarily as a facilitator to the development process, private sector participation was aimed at bringing technical and managerial expertise in delivering good quality mass housing projects. It was a good sign that many State governments were joining hands with private entrepreneurs in resolving the acute housing problem in urban areas.
According to CREDAI estimates, of the average housing cost of Rs. 2,700 per sq. ft., Rs. 700 is accounted for by a host of taxes and duties. “We have calculated when a sale takes place at such a price, the total that is collected by way of direct and indirect taxes, duties, levies, octroi and service taxes amounts to more than 25 per cent of the price. This is a matter of concern,” said CREDAI Chairman, Kumar Gera.