At the Government level many new policy initiatives have been taken recently to boost the real estate sector in India. These policy decisions will lend a stimulus and impetus to the industry. It is beyond doubt that the new initiatives will unlock the potential of the sector. Also, along with the stimulus package announced by the Government, the Reserve Bank of India (RBI) has taken a definitive step whereby banks are allowed to devise new schemes beneficial to the property sector.
As part of the Government initiatives to boost real estate boom sector India, RBI has declared concessional schemes for the real estate sector. Such initiatives include:
o Urban Land (Ceiling and Regulation) Act, 1976 (ULCRA) repealed by increasingly larger number of states.
o In case of integrated townships, the minimum area to be developed has been brought down to 25 acres from 100 acres.
o 51 per cent FDI allowed in single-brand retail outlets and 100 per cent in cash-and-carry through the automatic route.
o Full repatriation of original investment after three years.
o Minimum capital investment for wholly-owned subsidiaries and joint ventures stands at US$ 10 million and US$ 5 million, respectively.
o 100 per cent FDI allowed in realty projects through the automatic route.
Further, in its endeavour to initiate new policies to boost the real estate sector in India, the Ministry of Commerce and Industry, Government of India, has taken steps to reduce the time taken to develop special economic zones (SEZs) by simplifying the procedures to get the tax-tree industrial enclaves notified. Now developers can easily get their land classified as an SEZ at the outset itself by producing title deeds to prove their ownership. Again, the Government has announced several concessions in the Budget 2008-2009.
New Government initiatives to boost sector of Real Estate India include granting a tax holiday on profits from initiates in the financial year 2007-2008. In order to enjoy this benefit, the housing projects should be of the affordable housing unit type of 1000 to 1500 square feet. Another condition is that such projects should be completed by March 1, 2012. Further, the Finance Ministry has allocated US$ 207 million to grant 1% interest subsidy on home loans up to US$ 20, 691. In order to avail this benefit, the cost of the home should not be above US$41, 382. It is believed that these initiatives will be add further impetus to the real estate sector in the country.