On February 1, 2025, India’s Union Budget 2025-26 is set to be presented, yielding high expectations across various sectors, particularly real estate and Micro, Small, and Medium Enterprises (MSMEs). Stakeholders anticipate bold measures aimed at bolstering economic growth and addressing persistent challenges.
The real estate sector is particularly optimistic about what the upcoming budget will bring. Industry experts are urging for progressive reforms to stimulate growth by implementing tax incentives for homebuyers and investors. There are calls for the rationalization of Goods and Services Tax (GST) rates on under-construction properties. A higher tax exemption limit for housing loans is expected to ease financial burdens on potential homebuyers, making property acquisition more affordable.
Implementing tax incentives for rental housing could attract institutional investments, which would significantly benefit urban renters. According to the Economic Times, industry insiders believe the real estate sector is poised to play a pivotal role in India's GDP growth, which hinges on these anticipated budget measures.
Another pressing issue facing the real estate sector is the need for policy shifts focused on sustainable and green developments. With global attention shifting toward Environmental, Social, and Governance (ESG) criteria, investors and developers alike are calling for subsidies or incentives for green building certifications. Incorporation of renewable energy sources within residential and commercial projects could fundamentally reshape the industry's sustainability narrative.
A simplified single-window clearance mechanism is another expectation from the upcoming budget. Developers contend this will vastly improve the ease of doing business, allowing projects to progress without unnecessary delays and reducing overall costs. Continued investment in infrastructure—specifically allocations for new metro lines, highways, and urban transport systems—will also be key to generate significant demand for real estate across growth corridors.
A focus on Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) is equally important. Reforming these financial instruments to make them more tax-efficient and accessible to retail investors would not only stimulate institutional and global interest but also catalyze investment across the sector.
Non-Resident Indians (NRIs) are now taking more interest than ever in Indian real estate. According to sources, the upcoming budget presents an opportunity for targeted measures, including streamlined repatriation processes and reduced tax burdens on property transactions. Enhanced ease of investments should also be on the agenda, which could potentially lead to significant boosts in NRI investments across residential and commercial properties.
Tarun Singh, the Founder and Managing Director of Highbrow Securities, highlighted, “I'm excited to see how the government builds on the momentum of previous years to drive growth in India's MSME sector. Sustaining this momentum is...Ensuring growth through enhanced credit accessibility and simplified IPO listing procedures is imperative.”
Singh elaborated on the importance of targeted interest subvention schemes aimed at reducing operational costs for MSMEs, emphasizing the need for innovative funding models and asset-light strategies. These initiatives are expected to promote corporate governance and financial transparency, which are necessary for sustainable growth.
Attention is directed to the automotive industry as well, wherein expectations include funding and incentives for electric vehicle infrastructure, service centers, and tax credits to support green technology advancements. This reflects the broader push for innovation echoed across various sectors as they prepare for the budget’s announcement.
The upcoming Union Budget is not merely a procedural formality; it embodies aspirations and strategic interventions necessary for long-term economic development. Observers believe the budget will strike the right balance between fiscal prudence and growth-driven policies.
Overall, the Union Budget 2025-26 presents significant opportunities. The hoped-for reforms are not just to support developers and homebuyers but to reinforce the broader economic framework of India. With the government’s focus on creating high-growth opportunities and responding to pressing challenges, the results could empower MSMEs and invigorate the real estate sector, contributing to India’s economic resilience.