Easier Land Acquisition Laws to drive development of Smart Cities
The concept of Smart Cities is a vision provided by the Modi government in its first Union Budget in July 2014.
Smart cities got a boost with a Rs 7,000 crore fund allocation for the initial framework. The industry is confident that in the upcoming Budget on February 28, encouraging reforms would be announced for the development of smart cities. Developers believe that single-window clearance, foreign Direct investment (FDI) and taxation could give the necessary impetus to Smart Cities.
Presently, the major hurdles developers are facing while making Smart Cities a reality are on the taxation front. Mohit Goel, CEO, Omaxe Ltd says, “Taxes and cost of land make almost 60-70 per cent of the total cost of any project. To encourage developers to work towards the concept of Smart Cities, the government needs to make provisions for cheap land and easy funding for buyers/developers. Infrastructure and economic sustainability of projects are also important aspects that the Government needs to focus on.”
Government has been moving steadily on smart cities and the Budget will have a lot of announcements on this front including the broader contours. With several countries such as US and Singapore pledging support, smart cities will bring in a lot of opportunities for private developers. Putting forward his suggestions, Goel says, “After allowing FDI in construction and affordable housing, the government must liberalise and allow FDI in other segments. Also, tax benefits under section 80 IB (10) of the Income Tax should be extended to Smart Cities, affordable housing and re-development.”
A Smart City requires collaboration of many developers, civic authorities and technology companies. “Smart cities are capital-intensive urban infrastructure development projects, so the government will have to create enabling and encouraging environment to participate. Single Window System for any clearance and priority funding are two crucial factors to determine success of such mammoth projects,” adds Manish Agarwal, Managing Director, Satya Group & Secretary, CREDAI NCR.
As per government mandate, a Smart City will have e-governance links, international standard facilities, SEZs, eco-friendly features, smart transportation system running on green energy, water and electricity conservation and smart system for collection and disposal of waste. With all practical purposes, building 100 smart cities simultaneously, would take anywhere between 8 and 10 years. While the dreams are big, so are the final benefits of it. The journey, though, could be difficult. Let’s see what the Government does to make it as easy as possible.