Facilitate Also ECB Window For Housing Stocks: PHD Chamber

PHD Chamber of Commerce and Industry asked the government to let the real estate developers avail benefits of an ECB (External Commercial Borrowings) window to fund their low housing stocks so long as the harsher interest rate regime in India is tamed for better.

opening up of the ECB route fully for the real estate sector is another major area which needs immediate attention since FDIs can provide the much required liquidity into the sector but ECB would provide for low source funding to Indian developers and ease the liquidity pressure, argues the Chamber President, Mr. Alok B. Shriram.

In a representation submitted to the Union Ministry of Housing and Urban Development by the Chamber following conclusion of its Conference on Creation of Housing Stocks in India, it has also urged for infrastructure status to be granted for affordable housing as it will facilitate long-term fundings through various channels which include ECBs and FDIs.

The Chamber President also sought relaxed norms for tax holidays for the sector under section 80-1A to encourage real estate development in the country, particularly for its economically weaker sections of the society.

In addition tax exemptions and reduction in developmental costs should be offered by the government to lure private developers for active participation in creation of housing stock in India at it would incentivize private developers.

According to PHD Chamber, multiple approvals are currently needed for creation of low housing facilities including for other real estate activities. This needs to be brought under a single-window mechanism so that approvals obtaining time is reduced to six months compare to current practice of three years which increases the cost of construction.

It has estimated by 2020, almost one third of India's gigantic population is expected to shift from rural areas and migrate to towns/ cities, further enhancing demand for real estate and transforming India from a rural society to an urban / semi-urban one.

While demand for housing has increased substantially over the years, supply in affordable housing has not kept pace. The gap between demand and supply in affordable housing can only be matched under Public Private Partnership where government draws up a mechanism to cross subsidies the land and construction costs. The single largest driver of cost towards housing is 'land'.

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