MoEF Notification provides a highly conducive environment to Indian real estate

Traditionally, Indian Real Estate revolved all around the location. With the rebooting of the old system of operations in wake of policy transformation events, the industry old adage about being ‘location-centric’ is witnessing focus shift towards ‘Timely execution’. The new business mantra is all about how quick a project obtains requisite clearances and permission by-laws in order to seek the commencement of work. A recent notification by the Ministry of Environment, Forest and Climate Change has delegated to local bodies the power to give environmental clearances for projects with a built-up area between 20,000 sqmtrs to 50,000 sqmtrs. This notification is ‘in sync’ with the prime objective of the Indian Government who is simplifying permissions and clearances process for real estate sector. The move is to achieve single window clearances by reducing the number of distinct approvals which cause major delays in the project approval, consequently in project take-off. This time the central government has rightly picked up environmental norms to expedite the process in principle. The aspect of ‘ease of doing business’ which has been diligently followed up by the Indian Government, is reflecting the positive impact on the growth of Indian real estate. Even as the positives keep on mounting, some aspects still cause delays - environmental clearance is one of the aspects. Estimates by NAREDCO show it takes about 12 months to get environmental clearance, this adds to the huge interest burden on project finance. The notification by the MoEF delegates the decision making power to the local bodies are expected to ensure environmental compliance as soon as possible. At the first level, the delegation should result in speedier clearance; the hope is that it will actually happen for the project sized up to 50,000 sq. mtrs. This will effectively, save the one year of time taken for environmental clearance, in turn reflecting upon interest burden on project finance – so that ‘affordable’ becomes a reality for residential real estate projects sized up to 50,000 sq. mtrs. Dr Niranjan Hiranandani, National President, NAREDCO says that “The request from NAREDCO had been to allow this up to a project size of 1,50,000 sq. mtrs. The Indian Government has chosen to begin with the project size of 50,000 sq. mtrs. We agree to this and hope that as the local bodies gain expertise in this regard, we should also look at the option of enhancing the size of projects where local bodies can evaluate and grant environment clearance. Ideally, delegating the decision to the local bodies makes sense, as a local perspective is available on environment clearances. It is expected that this decision will result in quicker resolution of permissions and clearances which makes it a definitely welcome move.” Metro cities have local bodies which have the technical skill to do the needful, in other cities; workshops can be organized to ensure that the environment clearance can be handled speedily by the local body.