India’s Real Estate Sector Isn’t Too Worried About Curbs On Chinese Imports

Indian builders don’t expect to be affected by the government’s proposal to increase duties on imports from China amid a deadly border standoff.

The real estate sector, which contributes nearly a tenth to India’s gross domestic product, imports around 10% of its materials, most of which is from China, according to Niranjan Hiranandani, national president of Naredco, a real estate body. That includes tiles, elevators, steel panels, electric switches and nails, among other items. The developer lobby Credai has urged its 20,000-odd builder members to shun Chinese goods.

We appeal to our member developers to embrace “Swadeshi” or “Made in India” way of life and business, Satish Magar, president of Credai National, was quoted as saying in a statement. “Credai requests all the 250 allied industries which are linked to the real estate sector to manufacture these products locally, especially the ones which are currently being imported from China.”

The Bureau of Indian Standards is finalising tougher norms for at least 370 products to ensure items that can be locally produced aren’t imported, Bloomberg reported on Thursday citing unnamed sources. Some of these products include steel, electronics, heavy and industrial machinery, glass, rubber and metal articles, pharmaceuticals and fertilisers. That comes when armies of the world’s two most-populous nations are engaged in their worst border conflict unseen in over four decades.

Most of the raw materials being used, according to the Credai statement, are already being made by India’s small and medium-sized businesses.

Imposing higher tariff on imports from China will impact supply chain in the real estate sector to an extent, according to Anuj Puri, chairman of Anarock Property Consultants. “However, since construction activity at the moment is not in full swing, many players may have the time to consider getting such materials from other sources. As with most things Chinese, ease of access and price have been considerations.”

Hiranandani said import substitution will impact the sector at two levels. “First, where we substitute imported products with similar products ‘Made in India’, and secondly, where we may not have domestic production capacity available to supply in the volumes required,” he said. “The first scenario is welcome and real estate as an industry supports the same”.

Nayan Shah, president of Credai-MCHI, the Maharashtra unit of the developers’ lobby, and chief executive officer of Mayfair Housing, said many developers have already started looking at solutions. “There will be a substantial deduction in imports from China, he said. “However, certain raw or construction materials for which is there are no other alternatives like high-speed MEP (mechanical, electrical, plumbing) or elevators will have to be imported from China.”

The national president of Naredco agreed. “The company manufacturing the product may be from any other country, but in most instances, the actual production and dispatch point was China,” he said. “If Indian companies are unable to match requirements in terms of quantum of production required, this may create a situation where a call will have to be taken—and, this may translate into an opportunity to source similar material/ products from manufacturing hubs other than those in China, in the short term.

The ultimate aim, Hiranandani said, is to have production facilities in India. If the switchover results in some delays, we will deal with the same, he said.