Credai on Friday stated it has written to Prime Minister Narendra Modi alleging that steel and cement companies are indulging in cartelisation.
The genuine estate sector body also sought the government’s instant intervention in regulating costs of important raw components, pointing out that a continuous upsurge will raise project fees and have a cascading impact on homebuyers.
“With a continuous and sudden upsurge due to cartelisation in the prices of steel, cement and other raw materials, real estate developers are experiencing an inevitable increase in construction cost and are faced with a situation that will create a delay in delivery, stalling of projects in some cases, thereby impacting the homebuyers at large. Builders are facing an uphill task of further convincing the customers of this additional burden,” Credai stated.
Cement costs have enhanced by more than 23% and steel costs by more than 45% because the starting of this year. In January 2020, cement cost (a 50 kg bag) was about Rs 349 and has enhanced to Rs 420-430 per bag in December. At the starting of this year, the per tonne price of steel was `40,000 and has rocketed to Rs 58,000 in December 2020, the association claimed.
Credai chairman Jaxay Shah pointed out that the sector has been working on wafer-thin margins and is battling unsold inventory on one particular hand and unfinished projects due to lack of funds on the other. With demand stagnant, developers have not enhanced costs and are promoting projects at cost-effective prices.
“Indian real estate plays an important role in strengthening the economy. Besides employing more than 40 million workers, the sector also is a key partner in many central government schemes such as affordable housing and housing for all by 2022, and supports more than 250 ancillary industries. But the sector feels ignored because of lack of support from the government on various issues. There is an urgent need to control the spiralling cement, steel and other raw material prices and I urge the government to take necessary steps at the earliest,” Shah added.
Credai president Satish Magar stated any raise in raw material price would lead to a rise in building fees and also the general project price. As a outcome, quite a few developers will be forced to halt building work, thereby impacting the delivery of the projects and so on. This would have a cascading impact on the homebuyers.