Industry Status for Real Estate Key Reforms to Fuel Economic Growth
As India braces for Union Budget 2025, the real estate sector is once again making a compelling case for its much-anticipated “industry” status. This long-standing demand, backed by industry leaders and experts, was highlighted in a recent survey conducted by Grant Thornton Bharat. The survey underscores the urgent need for key reforms that can accelerate investment in the sector, drive innovation, and contribute significantly to India’s economic growth. The real estate sector, which plays a critical role in national development, stands at a crossroads, with the need for fiscal support and policy interventions more pressing than ever.
India’s economic trajectory is poised for remarkable growth, with the country expected to become the world’s fourth-largest economy by 2026 and reach the $5 trillion mark by 2028. Despite this optimistic outlook, the real estate sector faces multiple challenges, including an urban slowdown, fiscal deficits, and global economic uncertainties. The survey points to the need for decisive action to boost real estate investment, particularly through simplifying the Goods and Services Tax (GST) on under-construction properties, rationalising stamp duties, and enhancing tax incentives for affordable housing. Shabala Shinde, Partner and Real Estate Industry Leader at Grant Thornton Bharat, emphasised that such reforms are essential to reignite demand and spur the sector’s growth.
One of the most critical suggestions in the survey is granting industry status to the real estate sector. Such a move would not only streamline funding access but also help attract investments into affordable housing, thereby stimulating construction and job creation. As demand for housing continues to outstrip supply, especially in urban areas, this reform could provide the necessary impetus for addressing India’s housing shortages. The need for affordable housing is pressing, and industry status would make it easier for developers to secure financing, implement innovative construction methods, and scale up operations to meet growing demand.
Further, the survey suggests incorporating blockchain technology and tokenisation into real estate transactions to foster innovation and investment. Tokenisation could make real estate transactions more transparent, secure, and efficient, allowing investors to buy and sell fractions of properties. This approach aligns with the global trend of digital transformation, providing an opportunity to integrate cutting-edge technology into India’s real estate sector. In addition, proposals to incentivise real estate investment trusts (REITs) through tax exemptions on capital gains could also play a pivotal role in boosting investor confidence and liquidity in the market.
Sustainability remains a core concern for the future of India’s real estate sector. The focus on sustainable development, particularly in the context of affordable rental housing, is essential to meet urban housing demands while minimising environmental impact. The survey highlights the importance of prioritising funding for rental development, which would not only benefit more people but also help alleviate housing shortages in urban centres. By incentivising the construction of energy-efficient and eco-friendly buildings, the government can promote long-term sustainability while improving accessibility for low- and middle-income families. Urban infrastructure improvements, such as digitised land records and the development of smart cities, will further enhance operational efficiency, transparency, and sustainability in the sector.
In conclusion, the Grant Thornton Bharat survey presents a roadmap for revitalising India’s real estate sector. The recommendations outlined in the report, from granting industry status to integrating blockchain technology and enhancing tax incentives, are designed to address the pressing challenges faced by the sector. As the government prepares for the Union Budget 2025, it is clear that real estate is poised to be a central focus. With the right policy reforms and strategic investments, India’s real estate sector could become a key driver of economic growth, job creation, and sustainable urban development in the years to come.
