October 30, 2021
Coimbatore : The last six months from April to September this year has seen an unprecedented and continuous increase in prices of various construction materials resulting in a sharp escalation of construction costs. The prices of Cement have gone up from Rs 280 to 300 per bag in March last year to Rs 480 – 520 per bag now.
Similarly steel prices have gone up from Rs 42000 per tonne to Rs 76000 per tonne. During the corresponding period, Sanitary and Hardware, electric products and PVC product prices have increased by 30 – 50%. Much of this has been caused by increase of raw material costs, fuel prices and consequently freight charges.
Mr.Gugan Ilango, President CREDAI Coimbatore has stated that this increase in costs of materials has significantly pushed up construction costs by Rs 300/ to Rs 450/ per square feet and has caused tremendous difficulties for the Construction sector and real estate developers, many of whom have promoted affordable housing to suit lower and middle income groups to suit the budget and requirements of the customers. It is unfortunate that after a prolonged covid situation, when the industry is beginning to look up with increased demand this price problem has come like a big blow to the industry and customers alike.
The problem has further got compounded by GST regulations for the Construction sector which are not permitted to avail input credit on raw materials. Mr Rajiv Ramasamy, Secretary CREDAI states that lack of input tax credit has resulted in a tax on tax only for real estate industry thereby increasing tax alone by up to Rs 220 – 250 per sq ft. We urge the central and state governments to control price raise and immediately restore the facility to avail input GST tax credit for the real estate sector to ensure that the Real Estate sector comes out of its current crisis and works towards the goal of providing affordable homes for all Indians. Further this would also result in safeguarding the livelihoods of a huge labour force second only to agriculture, who are dependent on this sector, he added.