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Construction : Web Exclusive | June 2014 | Source : Construction Update

Industry Wishlist for the New Government

The Indian economy has been going through challenging times in the last two years. According to a recent CARE Ratings report, low industrial growth has impacted the transport sector and less activity in the infra space has affected construction. Although times have been unstable, leaders across sectors in the construction industry have held themselves up and pulled through. That said, some of them have not only stayed afloat, but have even prospered. Further, a new government at the Centre to drive growth has triggered expectations from various industry players. Hence, CW has colated views from industry leaders about their wishlist for the new government.

REAL ESTATE

Kumar Gera, Chairman, Gera Developments Pvt Ltd

“After about three decades, the people of India have handed a clear mandate to a single party to form the government. Uptil now, excuses for ‘non performance’ have been attributed to coalition politics. Thus, the new government shall have no such excuse and therefore expectations are extremely high. Recalling the very positive steps taken by the BJP-led NDA when it was in power the last time, one does expect that construction and infrastructure will get the much needed impetus. One such focus should be towards formulating policies to create affordable housing that will also fuel numerous other allied sectors and contribute significantly to the GDP.”

Pon Ravichandran, Director, Greenntree Homes & Ventures
“The list of real estate sector expectations from the new government would be a very long one. However, in a nutshell, here are a few aspects that I feel require attention. First, reduction of taxes and removal of service taxes as these significantly increase the price of any property, thereby further burdening the common homebuyer. Another important cut down can be the reduction of repo rates and in turn, reduction of rate of interest on home loans as this could encourage more people to opt for loans. Last, the government should provide ‘industry’ status to the real estate sector, as with this, banks will automatically reduce the interest rates for the real estate sector.”

Shailesh Puranik, Managing Director, Puranik Builders
“We are very optimistic with the new stable government and expect that it will take initiatives to resolve issues pertaining to real estate on a top priority, which will result in favourable growth of the sector. One main focus for the real estate sector is industry status. Among other priorities, the sector is awaiting reforms such as single window clearance system to speed up the process to avoid delay and the reduction of raw material prices. The new government should also resolve issues related to speeding up of environmental approvals. Easy access to funds and low interest rates on procuring capital is also one of the vital demands of the sector.”

M Murali, Managing Director, Shriram Properties
“In my view, the election and election results have had a significant impact on the market. Due to the new stable government that has emerged, the market will witness the return of buyers in large numbers - thanks to restoration of their confidence. Further, in my opinion, the new government should relook at the FDI policy and look into the real estate bill. Another crucial aspect to be focused on is the creation of an investment-friendly real estate market by keeping interest rates low and employment generation high. Quicker enactment on Real Estate Regulation and Development Bill will lead to healthy growth for the sector. At the same time, the Bill should encompass all the stakeholders and not just the developers in isolation.”

CONTRACTORS

Vineet Mittal, Founder, President, Solar Power Developers Association (SPDA) and Vice Chairman, Welspun Renewables Energy

“The election results are prosperous for the country. Indeed a triumph of the Modi factor, which gave the idea for change. A stable government with clear majority will boost confidence of the industry – both at home, as well as for the global and foreign investors. This will help India regain its status in global affairs and win back its rightful position. The surge in the market stands testament that the billions of dollars of investments sitting on the fence, due to cloudy policy - will now come to India. I’m positively hoping for new and improved governance!”

BUILDING MATERIALS

Dilip Oommen, CEO & Managing Director, Essar Steel India

“Steel is crucial for the growth of any economy. The steel industry contributes to over 3 per cent of India’s national GDP and employs more than 2 million people directly and indirectly. The demand for steel has faced a drastic drop in the past couple of years to abysmal levels of around 3 per cent. From the new government, we anticipate steps in the direction of boosting consumption in steel industries, a favourable mining policy to improve raw material security and reducing the high finance cost by setting up a separate agency for priority lending to the steel industry. This will help in creating a conducive environment for the steel industry to invest in creating capacity and achieveing the vision of 300 mmtpa by 2020.”

EQUIPMENT

Vipin Sondhi, Managing Director & CEO, JCB India

“Given the great need for infrastructure in India, the industry will grow at a rapid rate. The real question is, when will the market turnaround? There has been a positive intent from the previous government, but the crucial part is the execution. In my opinion, the new government should first create a regulatory body to carry out active monitoring and streamline end-to-end coordination to momentum. Bringing back the economy from the slump will be a very big and revolutionary challenge for the government.”

Anand Sundaresan, Vice Chairman & Managing Director, Schwing Stetter India
“There is little doubt that India continues to be a potential growth story. While 2014 is a challenging year for the industry, there are silver linings visible to the discerning eye. We are hopeful of the new government, that infrastructure will be of prime focus and we expect to see growth in the second half of 2014.

Shishir Joshipura, Managing Director, SKF India
“We expect the new government to revive the faltering growth through a positive and conducive investment policy formulation and implementation. We believe that the new government will revive investment climate in the country and drive robust growth of the manufacturing sector. The government should prioritise inflation control, simplify tax regime and create a climate conducive for investment. This will help India grow and reach its actual potential.”

ASSOCIATIONS/CONSULTANTS

Sanjeev Ranjan, Managing Director, International Copper Association India (ICAI)

“We congratulate the new government and are hopeful of positive developments in the infrastructure segment. By kick-starting stalled infrastructure projects, the entire economy can be pushed into momentum. The most important task for the new government is how to unblock $255 billion worth of stalled projects to bring back India on the much desired growth path of 8-9 per cent. Reviving stuck projects should be the top focus of the new government, which affects various sectors. Every sector from construction to thermal power plants and steel mills, are all stuck for reasons ranging from delayed environmental clearances to blocked land acquisition. Energy-efficiency savings can also be one of the first things that the government should look into by focusing on renewable energy.”

Vijay Kalantri, President, All India Association of Industries (AIAI)
“The electoral verdict signals a clear mandate for development, employment and growth in the industrial and manufacturing sectors. Through the model example of Gujarat, Modi has restored faith in the people about his focus on the progress of industrial development. I hope that the new government will devote attention to the implementation of GST, doing away with retrospective tax, GAAR. In my perspective, the new government should also implement more transparency in coal, gas and mining linkages and infrastructure. Another focus should be promoting small-scale enterprises to generate employment. The rationalisation of tax-policy, multiple licenses and redundant laws should be spotlighted as well.”

Lalit Kumar Jain, Chairman, CREDAI
“We at CREDAI express our hope that the new government will bring in a positive change to real estate developers and buyers in the otherwise dark era that has been witnessed during the previous government. I hope that the new government will pave way for realty reforms and implement its promise to ensure ‘housing for all’. For an immediate plan of action, I suggest efficient and accountable governance in building approval process. The realty reforms should cover administrative, banking, tax and legal aspects. It is imperative to go for single window system of approvals, correct the RBI’s perception of housing sector and have a balanced land policy that will help both farmers and developers.”

Shishir Baijal, Chairman & Managing Director, Knight Frank India
“With so much riding on the general elections, we are happy that the results indicate a stable and progressive government coming in place. The last couple of years were not the best for the Indian real estate industry, and the sluggish growth impacted all asset classes. The economic and political stability will act as a catalyst for revival of the real estate sector in India. The stakeholders are cheerful and expect the business environment to be upbeat in the coming six months.”

Sanjay Dutt, Executive Managing Director, Cushman & Wakefield South Asia
“With the emergence of a stable government, we can expect that policy decisions will be taken and implemented unfalteringly. The new government should be able to provide a new direction and guidance to core policies that will have direct and indirect impact on the sector. With the legislature and executive getting back to the business of governance for the next five years, investments in various businesses and sectors of the economy are expected to pick up pace, all of which will generate more demand for real estate assets. A stable government will lift the sentiments of the investor community who play a dominant role and this will impact housing and office sales.”

Amit Gossain, President, ICEMA
“The Infrastructure industry is pinning hopes on the new government however, I feel the road from political stability to economic outcomes is rather a long one. The government will have to work on some underlying issues to ensure long term and sustainable progress.”

OTHERS

Vineet Agarwal, Managing Director, Transport Corporation of India

“Logistics infrastructure of the country needs urgent refurbishment. The sector is plagued with inefficiencies and high costs. The priority areas that we feel can take the sector forward include an industry status and an integrated policy for the logistics sector. Focus should also be on multimodal transportation, long term planning and financing for the sector. Logistics Infrastructure is a critical enabler of India’s economic development. Thus, the country’s network of roads, rail and waterways will be insufficient as freight movement is set to increase about three folds in the coming decade. This shortfall in logistics infrastructure will put India’s growth at risk. Thus, this should be the government’s primary focus.”

Sachin Sandhir, Managing Director, RICS South Asia
“While there may not be any immediate impact on the economy, the electoral verdict signals a clear mandate for the growth of housing and construction sectors in the country that will also boost employment and growth. The new government should work towards the betterment of the sector by removing the regulatory bottlenecks in the way of project approvals and bring pending reforms such as real estate regulation. The housing sector particularly is facing a number of challenges that have been neglected – this has resulted in drastic drop in sales across our cities. Hopefully, the new government will try to bring back consumer confidence into the market by removing faulty impediments.”

Sumit Sharma, Vice President & Global Capability Lead, Sapient Global Markets
“With a new and supposedly stable government in India, it is expected that the industrial activity will pick up, which will have a positive impact on the demand for energy resources. The chances of international projects have also increased as a more business-friendly government has been elected. The fact that the power and coal ministry have been combined towards a more integrated energy ministry is a sign towards focus on energy security for the country.”

Khushru Jijina, Managing Director, Piramal Fund Management
“We expect the clear mandate given to the Modi government to translate first and foremost into decisive policy measures and an improvement in near-term investment sentiment. From a real estate perspective, we expect a clear and declared focus on infrastructure investment and final clarity on various regulations impacting the sector such as the national land use policy and the real estate bill. Clarity on land acquisition, quicker approvals and a simpler permission process, increased availability and reduced cost of funding, as well as better infrastructure will all provide the impetus that the sector needs especially for ‘affordable’ or ‘low-cost’ housing, which has traditionally been somewhat neglected by typical private equity financing channels. These are the primary measures that the market is expecting from the new government.”
 
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