The Assocham has pointed out that one of the reasons of high cost of real estate and housing in India is the cost of finance. A major part of housing loans constitute loans to individuals in the higher income group. Only 5-7 per cent of the loans disbursed by the housing finance companies reach builders and developers.

In the absence of loans available from financial institutions, most of the developers access funds from private sources of finance at high interest rates which ultimately leads to higher real estate prices.

The industry status will help the sector to access bank lending at average interest rates at low collateral as against high risk rates prevailing at present. Further, it would also help sector access central and state subsidies in case developers are building in backward regions as well as north-eastern regions and raise external commercial borrowings.

The Assocham has also sought that the terms of loans extension for real estate should be made easier. It holds that higher debt equity ratio should be available for real estate sector as under current scenario, restructuring of advances should also be made available as most of the developers have not been able to adhere to their respective promise schedule for repayment of their loans.

The Chamber has also mooted a proposal for providing infrastructure status on housing so that mass housing activities are carried out in an integrated manner. Real estate developers need to be given incentives for creating such an infrastructure in the country.

Assocham, therefore, suggests that in the definition of infrastructure facility under Section 801A, the following clause should be added. "An integrated township and group housing development on area more than 10 acres involving provisions of residential, educational, medical, community, commercial or institutional building and creation of required facilities including roads, water supply, water treatment, sanitation and sewage system."