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Issue 6
July , 2007
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Single-window system for environment clearances for builders being planned

Source: Times of India, Date: July , 2007

The Union Government is in the process of framing easier environment clearance guidelines for builders that could significantly cut down the time needed for getting plans approved.

According to the new norms, a single-window system for environment clearances will replace the existing system where developers need to have separate clearances from the state and the Centre. This could enable builders to get their building plans approved within two-three months instead of the existing time span of up to two years.

Easier environmental guidelines for the real estate sector are being framed jointly by the ministries of urban development and environment and the Planning Commission. The new norms are expected to bring down the cost of operation for builders and create a favourable ground for foreign players. Experts believe that tough environment clearance requirements have been one of the major dampners for FDI in real estate.

“While we are serious about curbing property-hoarding and speculation in real estate prices, as a sweetener, we are considering easing the stringent norms at the entry point,” a senior government official said.

In many countries such as the US and the UK, property developers do not require any environment clearance for setting up real estate projects. In these countries, the builders just have to give a bank guarantee to the state. Though it would be unfeasible to replicate the US model in India, the government is attempting to introduce similar flexibilities in the existing regulations.

Last year, the Planning Commission had sent a missive to both the Centre and the states, urging them to do away with unnecessary environment norms.

Till now, FDI worth $3.5 billion has been pumped into Indian real estate. The government is of the view that the numbers could go up significantly if unnecessary regulatory hurdles are stamped out.

India began allowing 100% FDI under the ‘automatic route’ in the construction and development sector from February 2005, to spur investment in the vital infrastructure sector and pave the way for global real estate biggies into the country. The real estate and construction sectors attracted FDI to the tune of $3 billion in 2005-06 out of a total FDI of $19 billion which flowed into the country.