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Speedy Building Permissions May Bring Down Project Costs In Maharashtra

Maharashtra ranked 10 in ease of doing business in 2016. The move is expected improve its ranking this year.



Worker sit inside a building under construction. (Photographer: Brent Lewin/Bloomberg)
Worker sit inside a building under construction. (Photographer: Brent Lewin/Bloomberg)

The Maharashtra government’s directive for speedy approval of construction permits by municipal corporations and other civic bodies is likely to help reduce project cost for developers.

The state’s Urban Development Department recently mandated municipal corporations to issue all building permits within a month of application. Besides, a civic body will get a week’s time for plinth inspection reports, and another eight days to grant completion-cum-occupancy certificates. The revised maximum time limit for tree-felling permits has been fixed at 45 days.

This directive would shorten the timeline for approvals under the Maharashtra Regional & Town Planning Act, from 60 days currently. And with shorter approval timelines, project cost is expected to come down significantly.

Welcoming the order, Niranjan Hiranandani, co-founder of Hiranandani Developers said the “movement of files over a period of time have become even more slow. Sometimes it takes over two years for the entire process.”

Hitesh Thakker, secretary, National Real Estate Development Council agrees. “Earlier, getting the building commencement certificates used to take about 3-4 months,” Thakkar said. The new norms will lower the holding cost of a project, he added.

Besides this direct benefit, the new norms will shorten the project cycle and help bring down interest costs for developers, according to Ashutosh Limaye, national director- research, JLL India. This can iron out any delays in the pre-construction phase, he said, adding that supply would benefit as well.

“If developers can take money out sooner, that would help them undertake more projects, thus boosting the supply,” said Limaye.

Limaye is also optimistic that shorter approval timelines will bring in more transparency. Civic body officials will now be more cautious about missing deadlines. “Internally, various departments would have to be accountable for approving or disapproving the project.”

An official in the Urban Development Department, however, told BloombergQuint that there are no provision in the law, for now, where officials could be held accountable if these deadlines are missed.