India’s real estate industry sector, riding a wave of high sales and new project launches, is lobbying the government for industry status and tax incentives to support affordable housing. Top executives believe these measures will fuel further growth and benefit both developers and homebuyers.
Industry status has been a long-standing demand, according to Pavitra Shankar, Managing Director at Brigade Enterprises. “This recognition would provide easier access to institutional financing, streamline regulations, and boost investor confidence,” she explained.
Real Estate Industry status would elevate to MSME status
Shrinivas Rao, CEO (APAC) at Vestian, echoed this sentiment, highlighting the potential for increased access to funds and foreign investment with industry status. G Hari Babu, Chairman at NAREDCO, emphasized the plight of small and medium builders currently struggling to secure loans. “Industry status would elevate them to MSME status, unlocking lower interest rates from banks,” he stated.
Beyond real estate Industry Seeks Industry Status and Tax Breaks to Boost Growth industry status, developers are seeking tax breaks to stimulate demand for affordable housing, typically priced below Rs 50 lakh. Ramani Sastri, Chairman and Managing Director at Sterling Developers Pvt. Ltd., proposed raising the tax deduction limit for home loan interest payments from Rs 2 lakh to Rs 5 lakh annually. “This will incentivize homeownership and invigorate the market,” he argued.
Affordable housing losing ground
Anshuman Magazine, Chairman and CEO (India, South-East Asia, Middle East & Africa) at CBRE, pointed to the past success of tax breaks for affordable housing projects. “The government previously offered a 100% tax deduction on profits from developing such projects,” he said. “Bringing back this scheme would significantly benefit developers operating in low-margin segments.” This call to action comes amid concerns about affordable housing losing ground to luxury developments.
Several industry leaders also called for a revision of the definition of “affordable housing.” Currently, the Ministry of Housing and Urban Poverty Alleviation sets size, price, and buyer income as the qualifying criteria. However, Magazine believes this definition needs an update. “The government should consider raising the size limit for metro cities to 90 sq m and establish multiple price brackets based on city-specific dynamics,” he suggested. This would better reflect the varying housing costs across different regions.
The real estate sector’s push for industry status and targeted tax breaks underscores its ambition for sustained growth. By addressing these demands, the government has the potential to unlock a wave of investment, empower small developers, and make homeownership more accessible, particularly for those seeking affordable housing options.
