Incentives for green building materials & green buildings
To align with the NDC goals and mitigate the carbon footprint of the construction sector, the government should introduce financial incentives for the production and utilization of green building materials. This could manifest through reduced GST rates, tax credits, or grants for companies manufacturing and supplying environmentally friendly construction materials. The adoption of green building materials not only reduces carbon emissions but also promotes a healthier and more energy-efficient living environment. Another important aspect is that of Green Rated Homes where the government may consider providing interest rate-linked incentives to home buyers to drive demand for Green Homes. It’s important to note that the Green Building adoption rate hasn’t gathered the necessary momentum despite almost two decades of efforts on all fronts, with a mere 5% of buildings have yet gone green. Mandating the adoption of the ECBC code (Energy Conservation Building Code) will also help the cause.
The government must recognize and reward companies committed to these eco-friendly practices, ensuring that sustainable construction becomes the norm rather than the exception.
Research and development investments
Allocating funds for research and development initiatives in the construction sector is pivotal to fostering innovation in sustainable technologies. By supporting the development of energy-efficient construction methods and materials, the government can stimulate a culture of continuous improvement. Notable in this regard is the government’s initiative of the Global Housing Technology Challenge which led to the introduction of 6 different construction technologies being implemented on a large scale across the country. Similar projects on a continued basis will drive innovation in the sector.Investing in R&D will accelerate the adoption of green building practices, making sustainable construction methods more accessible and cost-effective in the long run. Therefore, a budget that prioritizes R&D in the construction sector is an investment in the future, ensuring that the industry remains at the forefront of sustainable practices.Reduction of GST for building materials in the 28% category
Cost is a critical factor that influences both the construction industry and end consumers. To address this concern, we propose the reduction of the GST on certain building materials, particularly those still in the 28% category, such as cement. This measure will not only make construction more affordable but will also contribute to the growth of the building sector.
Reducing the GST on essential building materials will have a cascading effect, positively impacting the cost of constructing and owning a home.
Interest rate reduction for affordable housing
Affordability is a key concern for both aspiring homeowners and developers. A reduction in interest rates for housing loans (especially green homes) will significantly enhance affordability, boosting housing demand and stimulating economic activity. This measure not only supports the government’s vision of ‘Housing for All’ but also creates a positive economic ripple effect, generating employment opportunities in the construction and related industries.
In a nutshell, the upcoming budget presents a unique opportunity to align economic goals with environmental responsibility. By incentivizing green building materials, promoting research and development in the construction sector, and addressing affordability concerns through GST reduction and interest rate reduction, the government can lay the foundation for a sustainable and resilient future in the construction industry. This strategic approach will not only contribute to the nation’s environmental goals but also foster economic growth and job creation.
The author is Co-founder & Managing Director, Magicrete.
