Is real estate beneficial or detrimental to Indian manufacturing and ‘Make in India’?
The sluggish tempo of manufacturing expansion in India is frequently criticised. Many claims that, despite sufficient purchasing power, resources, technical know-how, and funding accessibility, we are unable to compete with nations such as Vietnam or Bangladesh in terms of manufacturing sector growth. Some even blame the real estate sector for India’s slow manufacturing progress. This poses numerous critical issues:
- Is real estate a victim or a cause of India’s slow manufacturing?
- Why has ‘Make in India’ remained a mere slogan in Indian real estate?
- Is it merely the expense of using indigenous goods that discourages their usage, or are there bigger environmental challenges at play?
To be honest, real estate export flow and emphasis on finishing items have grown since 2014. If it was China yesterday, we now have additional worldwide markets to import sanitary products and electrical items from, such as Vietnam, Thailand, and Bangladesh. The lack of progress in indigenous manufacturing is due to cost arbitrage. While international corporations continue hesitant of establishing manufacturing operations in India, even domestic manufacturers find high corporate taxes and weak labour reforms a major impediment.
Manufacturing Indian real estate
- Every year, developers import roughly USD 10 billion in building construction materials and services.
- These imports encompass not only things such as flooring, cement, and connected home, but also services such as technology, consulting, and architects.
- Imports contribute to about 30%-50% of the overall project cost in premium developments.
- The Prime Minister has directed the sector to conduct a cost-benefit analysis of ‘Make in India.’
The path ahead
The issue now is, “How can real estate consume more from ‘Make in India’ manufacturing?” Furthermore, if the query is not in pace with the greater ecology, it is faulty. Creating and establishing a manufacturing facility in India has its own set of problems. Cheap labour simply would not provide India with a competitive advantage or cost advantage over export commodities. ‘Make in India’ must transcend the language of nationalism, with changes ranging from reduced corporate taxes to labour rules, and the country must become a pleasant hunting field for the world’s manufacturers.
Reforms are required to encourage domestic manufacturing.
- Reduced corporation tax
- Tax breaks to promote exports
- Labour-reform initiatives
- Contract Compliance
- Opposition to retroactive taxing
Profitability and client satisfaction are the most important aspects of every business. Why would anyone, especially builders, choose a locally created product if foreign producers have an edge in these two important areas? As a result, although Indian manufacturers lag further behind their global counterparts in exporting local products, they also lag in selling to Indian firms. As a result, real estate cannot be held solely responsible for concerns that are part of a wider ecosystem.
Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.
