“I favour what stimulates a sector where there is a huge demand... and any sector where this stimulation is needed, the government has to look at it,” Mr Kamal Nath told reporters on the sidelines of a real estate conference here on Monday.

According to estimates by the Confederation of Real Estate Developers Association of India (CREDAI), of the average housing cost of Rs 2,700 per square ft in the country, Rs 700 is accounted for by a host of taxes and duties. “We have calculated when a sale takes place at such a price, the total that is collected by way of direct and indirect taxes, duties, levies, octroi and service taxes amounts to more than 25 per cent of the price. This is a matter of concern,” CREDAI Chairman Kumar Gera said.

Regulatory issues

Government allows 100 per cent FDI in the construction sector and the policy permits setting up of wholly-owned subsidiary, Mr Kamal Nath said.

However, it is “important to address institutional and regulatory aspects as well as strengthen and expand the capacity of financing institutions for further growth of the sector,” Mr Nath remarked.