Indian realty sector has exhibited a noteworthy resilience to the anxiety caused by the continuous fall of rupee over the last few weeks. Consistent flow of FDI and NRI investments have been absorbed by this sector and also gained brand recognition in the international market. However, to realize its full potential of growth, the National Real Estate Development (NARDECO) council has appealed Indian realtors to reduce their dependence upon imports of construction material. Considering the sustainability of realty sector’s growth and development, this call has solicited the local realtors to go downright Indian.
As reported by Deccan Chronicle, NARDECO’s move to go Indian has come from the analysis of the numbers originating from the export-import equation in real estate sector of India. A huge amount of money (in USD) is spent by local realtors to import construction equipment and material. Construction material not being the only component of import, the services to be utilized in developing premium properties is another segment which demands huge payments in dollars. A substantial portion of expenditure for developing a project is earmarked for such imports. Considering the current rate of exchange, the quantum of imports and outflow of dollars needs to be curtailed to stabilize the currency exchange market.
NARDECO’s proposition comes at a time when certain regulatory instructions are already being floated in all sectors of the Indian industry. The inflow of dollars is being encouraged through various reviews of policies like reducing the limit of the minimum area to be built by an Indian realty firm with foreign investments. Moving forward, the external commercial borrowing for residential realty sector is being considered to be exclusively categorized and differentiated from the commercial external borrowing. This effort would facilitate in attracting lower rates of interest for borrowings, hence, encourage more number of local developers to jump into the construction business.
As proposed, if the localization of material and services is adopted, the Indian real estate sector is expected to witness a new horizon of self-sustainability and self-induced growth. Sourcing the construction material from local sources would entail immense growth for ancillary sectors of real estate in India. Along with encouraging flow of investments form private equity and increased participation of local venture capitalists, a reduced dependency on imports will bring about the consistency in growth and development of Indian real estate for the coming future.