The real estate sector has long been a cornerstone of India’s economy, ranking second only to agriculture in its contribution to GDP. According to Jayesh Kariya, Partner and Leader, Transaction and Business Advisory at BSC Advisors Private Limited, the sector is also the second-largest job creator in the country, generating a ripple effect across allied industries. Projections indicate that real estate’s GDP share could rise to 13% by 2025-26, up from 7% in 2024, underscoring its growing economic significance.
Since the sector was liberalized in 2005, it has experienced periods of rapid growth as well as cycles of slowdown influenced by global trends. Over the years, a combination of policy, regulatory, and fiscal measures has helped real estate emerge stronger, putting it on track to reach $1 trillion by 2030 and $4.8 trillion by 2047.
Policy Reforms Driving Sector Growth
Key reforms have fundamentally reshaped India’s real estate landscape. Initiatives like the Real Estate (Regulation and Development) Act (RERA), the introduction of both large and SME-focused REITs, and granting infrastructure sector status to affordable housing have created stability and transparency. Fiscal incentives, GST rate reductions for the affordable housing segment, and the creation of the SWAMIH Fund have further boosted sectoral growth.
According to Jayesh Kariya, these measures, combined with progressive FDI and FEMA regulations, have provided the sector with the structural support necessary to drive long-term growth, attract investments, and reinforce confidence among developers and buyers alike.
Future Policy Recommendations
Despite significant reforms, there remain areas where further policy intervention could accelerate growth. Kariya suggests that granting “industry” status to real estate would unlock lower-cost funding, while digitization of land records and a unified single-window approval system could enhance transparency and efficiency. Streamlining stamp duty regimes across states and providing fiscal incentives for green buildings would further strengthen sustainable development.
He also emphasizes the importance of affordable financing, suggesting measures such as raising the threshold for housing loan interest deductions to Rs 5 lakh and expanding tax incentives for investments in REITs and listed real estate firms. Rationalizing SEZ regulations, particularly allowing larger non-SEZ built-up areas, could also support shifting industry dynamics and evolving demand patterns.
Rationalizing Tax and Compliance Frameworks
Jayesh Kariya highlights several reforms in the taxation framework that could benefit developers and homebuyers. Key recommendations include deferring point-of-taxation for Joint Development Agreements (JDAs), removing deemed taxation on unsold flats, rationalizing GST on free-of-cost areas in redevelopment projects, and enabling input tax credit (ITC) for commercial leasing developments.
“These measures would not only reduce compliance burdens but also improve liquidity and encourage investments, creating a more sustainable growth trajectory for the sector,” says Kariya. He adds that aligning taxation policies with industry practices will be critical to maintaining investor confidence and facilitating orderly development.
Infrastructure and Green Initiatives
The real estate sector’s future growth is closely linked to broader infrastructure development. Kariya stresses that continued government spending on roads, ports, metro connectivity, and other infrastructure projects will drive housing demand and enhance urban livability. Incentivizing green technologies—water conservation, renewable energy adoption, pollution control, and other eco-friendly initiatives—will help real estate contribute to India’s zero-carbon ambitions while creating long-term value for developers and homeowners.
Real Estate as a Growth Multiplier
With a combination of progressive policies, infrastructure development, and sectoral reforms, Jayesh Kariya believes real estate has the potential to act as a true multiplier for the Indian economy. By supporting employment, boosting allied industries, and attracting domestic and international investments, the sector can strengthen India’s GDP, expand urbanization, and play a crucial role in India’s aspiration to become a “superpower” by 2047.
“The coordinated effort between the government and developers, backed by rational policies and investment incentives, will ensure that real estate continues to drive economic growth, create jobs, and deliver long-term social and financial benefits,” Kariya concludes.
