The real estate sector is expecting a liberalised foreign direct investment (FDI) norm and easing of rules for external commercial borrowings, in the present tight project finance situation and rising cost of loans, from the Union Budget 2011-12.
On the other hand, another round of interest subvention and a higher cap on interest deduction available on housing loans to individual taxpayers will offer relief on the affordability front, real estate sector players said. Developers also raised the issue of input costs and felt the need to rework the excise and import duties on steel and cement to restrict the cost of construction.
Satish Magar, president of Confederation of Real Estate Developers’ Association of India, told TOI that the industry was reeling under the pressure of rising input costs for the past six months or more. “Prices of steel and cement – the two most important inputs for construction – have jumped 30 to 50 per cent in six months and have impacted the real estate prices. The budget should modify excise and import duty structure to reduce these costs by at least 20 per cent
Chaitali Rao, assistant manager, tax and regulatory services, at business consultancy Pricewaterhouse Coopers, said the realty sector has attracted many foreign investors who are starting or expanding their operations in India.
Foreign investors have so far contributed significant capital to India’s real estate market. Aggregate FDI inflows into the real estate sector are recorded at approximately 7.42 per cent of the total inflows. There was, however, a growing demand to do away with the three-year lock-in period for FDI investments in realty. The government should think of providing genuine relaxation from the lock-in requirements, which would give some relief to foreign investors.
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