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Finance ministry has also failed to establish a panel meant to review tax incentives to SEZ units and revenue losses incurred. Suneet MaheshwariEven as the government wrangles with when to bring in the Direct Taxes Code (DTC) and a goods & services tax (GST) to rationalise the country’s tax regime, the much-hyped special economic zone (SEZ) policy is seeing fewer investors as a result of uncertainty over the future tax regime.
The ministry of commerce & industry is learnt to have asked the finance ministry to leave policy for SEZs untouched in order to allow exports from them grow. The finance ministry has also failed to establish a committee that was supposed to review the tax incentives given to SEZ units and revenue losses incurred. The ministry was asked to form the panel by the parliamentary standing committee on finance, headed by BJP leader and former finance minister Yashwant Sinha.
“We have not received any communication from the finance ministry to set up such a committee. They (the finance ministry) were asked to form a group to assess revenue losses, which has not yet seen the light of day. This is bound to shake investors’ confidence. Even though developers and units have a 2014 sunset clause, investors are still shying away,” a senior commerce department official told Business Standard.
The number of fresh proposals being considered by the board of approval under the commerce ministry has also seen a visible decline. According to officials, this is more because a number of SEZ projects already approved will take time to come up. On the other hand, those who had aggressive plans to build SEZs around the country have put their projects on hold.
“I think it is high time the government takes a call on whether India needs SEZs, how many of them are required and the related tax breaks. If a project has been promised tax breaks, then it should be given. We need a clear tax regime and grandfather clauses. At the moment, there is considerable inconsistency and that is definitely shaking investors’ confidence,” said Suneet Maheshwari, chief executive, L&T Infrastructure Finance.Ravindra Sannareddy.
Critically, SEZs have over the years failed to gain popular support, largely due to the problem of land acquisition. “There are still a lot of problems pertaining to SEZs. This country has no definite land acquisition policy, which is the biggest problem. This has made the whole SEZ issue a land-grab problem, even as the global slump has tempered the irrational exuberance,” said a Mumbai-based developer, who refused to be identified.
SEZ units are given 100 per cent tax exemption for the first five years, 50 per cent for the next five years and 50 per cent on the ploughed back export profit for the next five years under Section 10AA of the Income-Tax Act. Under section 115JB, they are also exempted from minimum alternate tax. Besides, SEZ units are also exempted from central sales tax, service tax, state taxes and levies.
“There is a need to provide stability and ongoing support to the SEZ scheme. The proposed DTC Bill must adequately provide for such support. It is imperative that all central and state government agencies make coordinated efforts for the proper and smooth implementation of the SEZ scheme,” said Ajay Nijhawan, vice-president, Reliance Haryana SEZ, and convener, Export Promotion Council for EOUs & SEZs. The draft DTC Bill has suggested continuation of the 15-year tax holiday for units that are operational by March 31, 2014. In other words, units have to actually start exporting before this date to avail of income-tax concessions.
Developers, however, have mixed reactions to the entire imbroglio. According to Naveen Raheja, managing director, Raheja Developers, investors have “withdrawn from discussions with SEZ developers due to the proposed changes. DTC and GST are new concepts in India, but there are no firm plans to implement them. For a real estate player, both are critical and affect the general business scenario. The concept of taxation is changing, especially after the implementation of service tax on developers.”Naveen Raheja.
However, Sri City, southern India’s largest private SEZ, has not been affected by such instability at all. “We have not yet been affected by the DTC imbroglio. It has not been difficult to rope in big names,” said Ravindra Sannareddy, managing director, Sri City SEZ. Sri City is currently developing the region’s largest multi-product SEZ located at Tada, Andhra Pradesh, spread over 6,000 acres at an investment of Rs 1,200 crore.
Exports from SEZs continued to rise unabated, even though merchandise shipments from the country as a whole plummeted during the worldwide financial crisis. In 2009-10, exports from SEZs stood at Rs 13,937.04 crore, while exports to the domestic tariff area were Rs 19,201.78 crore. Between April and September of this fiscal, exports from SEZs topped Rs 1,39,842 crore, up 55.8 per cent over the corresponding period of 2009-10.
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Property prices are likely to come down in 2011 making it more affordable to own a house, as rising cost of home loans will temper demand and check the sharp bounce back of price after the slowdown in 2008-09, say real estate consultants. Housing demand had increased last year after economic revival boosted consumer confidence and banks introduced teaser rates with lower interest cost for borrowings.
Sensing better demand, builders had increased prices between 20% and 35% across the country. This will moderate after banks pulled the plug out of such attractive borrowing schemes and raised interest rates by about 50 basis points over the past one month. The correction process has already begun in overpriced locations of Mumbai, said Anuj Puri, chairman & country head at real estate consultancy firm Jones Lang LaSalle India . “The same dynamics will be seen in all cities that have had irrational price escalation,” he said.
Housing prices have increased despite developers reviving and completing pending projects besides launching new ones that has increased the supply. “The sharp rise in prices in such a short span of time is a growing concern and may slow down sales of residential properties in the next few months,” said GB Singh, chairman and managing director of Red Fort Capital, a real estate-focused private equity firm.
Chennai witnessed the highest rental and capital appreciation that rose as much as over 50% last year compared to 2009, according to real estate consultancy firm Cushman & Wakefield. Capital values in most mid-end locations have appreciated by over 20% annually with Gurgaon registering over 36% increase in value. “Property prices in Gurgaon are likely to see minor correction in 2011 as it has already reached high price points,” said Anurag Mathur, MD at Cushman & Wakefield. But some developers feel otherwise. Pradeep Jain, chairman at Parsvnath Developers , says there won’t be any correction in Delhi NCR as supply of affordable housing is limited but Mumbai will see a drop in prices.
After witnessing a slowdown in demand and construction activity for most part of 2009, Mumbai’s residential sector witnessed the strongest recovery with price rise of up to 15% in most mid-range micro markets. Prices rose faster than other locations in areas like Andheri (W), Malad and Goregaon due to large end user and investor demand for mid-range housing segment. One of the reasons why property prices revived swiftly after the price crash two years ago is the return of financial investors or speculators who create an artificial demand as soon as a project is launched in the hope of making a profit by selling to buyers at close of building construction.
These investors had re-entered the market in early 2010 but their interest has also started waning at the end of last year, a chief executive officer of a mid-size realty company said on condition of anonymity. The churn in asset prices over the last three years has ensured that these financial investors do become as dominant in booking property space as three years ago. As against 2007 when they constituted up to 70% of residential property sale, they constitute just about 30% today, say builders.
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If consolidation was the buzzword for the retail sector in 2010, the coming year is expected to see some big-bang entries of global retail majors as the sector looks forward to a positive outcome on the relaxation of FDI norms in retail. Even while India added around 5 million sq ft of retail space in 2010, some stores were relocated and some unviable ones faced closure. Once-lucrative businesses were bought out.
While Vishal Retail was acquired partly by Shriram Group and partly by private equity fund Texas Pacific Group, Indiabulls, which had acquired Piramal’s Piramyd Retail in 2007, put its retail expansion plans on hold to focus on its main businesses of financial services and real estate. Yet, with the lessons learnt from the past few years, prudent modern retailers managed to clock double-digit growth rates. Same store growth was well above 15%.
According to Thomas Varghese, CEO, Aditya Birla Retail , 2010 can rightly be called a revival year as “starting from the budget announcements to modifying income tax slabs, good salary increase across sectors and a fairly good monsoon—all aided in driving consumption across categories” . The revival though, had to overcome hurdles such as high rentals , attrition, higher cost of compliance and low investments flowing into the sector.
According to Varghese, the recession was a blessing in disguise for the retail industry. Though it slowed down the pace of growth, it helped retailers to introspect and revisit their business models. As a result , strong business fundamentals took over ambitious expansion plans, which warranted restructuring exercises , relocation of stores and renegotiating rentals. These initiatives helped improve the profitability and viability of different retail formats and also enabled retailers to innovate , adopt best practices and bring in efficiencies in their operations. “I am confident that rich learning from the last couple of years will enable them to expand and build a sustainable business,” said Varghese.
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Real estate market news in Ooty keeps you in sync with the course of development that the real estate market has gone through most recently. The pace of development in Ooty properties is so quick and extensive that only a reliable and instant source of property news in the city can keep you updated and well informed.
Today, it is possible to access real estate news online in the city with the growth of many real estate websites on houses. You will get an elaborate account of the current property prices in different areas of the city along with snippets on latest property development, which may enable you to analyze properly the current trend of the real estate market. Only after a detailed analysis of current real estate news in Ooty, you would be well positioned to invest profitably in the city’s burgeoning property market.
The present site indiahousing.com will provide you with the latest Ooty property news and below you can see some reference to that effect.
Several Israeli real estate firms have shown their interest in the booming real estate property in Ooty. As a beginning of a new era, an investment to the tune of $135 million has been made by an Israeli firm Elbit Medical Imaging Ltd. in residential as well as commercial segment.
An IT SEZ is proposed by Tata Realty and Infrastructure Ltd (TRIL) in collaboration with Tamilnadu Industrial Development Corporation (TIDCO) in Taramani. It will house a five star hotel, an international convention center and service apartments.
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