Smart cities, relaxed FDI norms to drive real estate sector

The Narendra Modi-led NDA government has announced a slew of measures to give a boost to the real estate sector, including an allocation of Rs 7,060 crore for the development of 100 smart cities, a reduction in the size of projects eligible for FDI from 50,000 sq metres to 20,000 sqm and halving the minimum investment limit for FDI to $5 million.

Announcing the Budget proposals, Finance Minister Arun Jaitley said he has also allocated Rs 4,000 crore to affordable housing for the urban poor through the National Housing Bank (NHB) and plans to extend incentives for housing loans. Slum development has been made part of corporate CSR activities.

The government will also provide the necessary incentives for real estate investment trusts (REITS) which will have a pass-through for the purposes of taxation in effect avoiding double taxation, Jaitley said.

Giving a definitive direction to the new government and PM Narendra Modi’s plan of building smart cities across the country, Jaitley allocated Rs 7,060 crore in the budget for developing 100 smart cities, redeveloping satellite towns of major cities as well as other smaller cities.

With an eye on strengthening infrastructure in the country, the Finance Minister also proposed setting up of an institution called 3P India with a corpus of Rs. 500 crore. This will help in mainstreaming public-private partnerships (PPPs) in the sector.