Key expectations for urban development in Union Budget 2025
This article is authored by Aman Moudgil, Director, Gilco Global.
Urban development, a cornerstone of the country’s economic framework, carries immense expectations as the Union Budget 2025 approaches. This industry not only supports millions of livelihoods but also drives investments and urbanisation, acting as a bellwether for economic growth. The budget presents a pivotal opportunity to address long-standing challenges while setting the stage for a more sustainable and inclusive future. Stakeholders from across the sector are keenly anticipating reforms and incentives that could enhance efficiency, accessibility, and innovation.
One of the most pressing concerns in urban development is the need to revisit the tax rates. Revising tax rates, increasing tax deductions, improving land allocation and boosting funding are essential steps to accelerate urbanisation and invigorate the construction ecosystem. These measures would not only support the urban development sector but also benefit allied industries, such as elevators, which play a vital yet often overlooked role in enhancing urban convenience.
The absence of financing options for specific components of urban development projects has created barriers to affordability and accessibility. The lack of provisions for financing private residential elevators. Introducing such options could significantly benefit homeowners, especially as multi-level homes become more common in urban and semi-urban areas. A relaxation in tax rates for elevators with up to five stops, along with targeted financial provisions, would make these solutions more affordable, thereby addressing a critical gap in the market.
Accessibility remains a cornerstone of inclusive urban development. The government has a unique opportunity to introduce tax benefits and tax concessions for elevators designed for paraplegics and elderly individuals with mobility challenges. Elevators must be treated as essential accessibility-friendly equipment, akin to other mobility aids already taxed at lower rates. Such a policy shift would underscore the government’s commitment to improving quality of life for vulnerable populations, ensuring that urban spaces are more inclusive and user-friendly.
Land allocation remains a perennial issue in urban development, often leading to delays and inflated project costs. Streamlining land acquisition processes and ensuring a transparent framework for land allocation could resolve several bottlenecks. This would not only accelerate project timelines but also attract greater investments from domestic and international players. Simplified land policies would complement ongoing urbanisation efforts, enabling developers to meet the growing demand for residential, commercial, and mixed-use properties in rapidly expanding urban areas.
Sustainability has become an integral aspect of modern urban development, and the upcoming budget is expected to reflect this shift. It is important to introduce tax incentives to promote sustainable practises and products within the construction ecosystem. Offering concessions for energy-efficient elevators, green building materials, and eco-friendly manufacturing processes could encourage industries to align with global sustainability goals. Such measures would reduce the environmental footprint of construction activities while fostering long-term economic growth. A focus on sustainability would also enhance India’s standing as a responsible global player in combating climate change.
Affordable housing continues to be a major focus area for the government, yet challenges remain in its implementation. Developers frequently cite difficulties in accessing funding and navigating regulatory hurdles. Expanding the scope of initiatives like the Pradhan Mantri Awas Yojana (PMAY) to include more beneficiaries and simplifying its guidelines could expedite the delivery of affordable housing units. Moreover, increased tax deductions on home loans could incentivise both developers and buyers, bridging the gap between supply and demand.
The construction ecosystem is heavily reliant on ancillary industries, from cement and steel to elevators and lighting. Providing targeted incentives for these industries could have a cascading effect on the urban development sector. I suggest offering tax concessions for energy-efficient elevators and accessibility-friendly designs resonates deeply with the broader push towards sustainable and inclusive development. By addressing the needs of allied industries, the government could ensure holistic growth across the urban development value chain.
Urban infrastructure remains a critical determinant of urban development success. Investments in metro rail networks, roadways, and public transportation systems have a direct impact on property values and market demand. The budget’s allocation towards infrastructure development could act as a catalyst for urban development projects, especially in tier-2 and tier-3 cities where urbanisation is gaining momentum. Integrating urban development planning with urban infrastructure development would result in well-connected, liveable cities that attract both residents and businesses.
PropTech is another area poised for growth with the right support. The adoption of digital platforms for property transactions, smart home technologies, and advanced project management tools has already begun reshaping the sector. Budgetary provisions for fostering innovation and research in PropTech could revolutionise how properties are developed, marketed, and managed. Encouraging startups in this space through tax incentives and public-private partnerships would further accelerate this transformation.
Sustainability also extends to waste management and water conservation in urban development projects. The construction sector is a significant contributor to waste generation, and integrating sustainable waste disposal practises could mitigate its environmental impact. Tax benefits for developers adopting rainwater harvesting systems, solar panels, and other green technologies would reinforce India’s commitment to sustainable urban development.
There is a need to prioritise sustainability within the urban development sector aligns with global trends emphasising environmental stewardship. Tax incentives for energy-efficient products and processes would not only reduce environmental impact but also foster long-term economic growth. This perspective underscores the importance of aligning economic objectives with ecological responsibilities, ensuring that growth does not come at the expense of environmental degradation.
Urban development also plays a crucial role in job creation, supporting millions of workers across construction, design, sales, and maintenance. The budget’s focus on the sector could have a ripple effect on employment, particularly in rural and semi-urban areas where urban development often drives ancillary industries. Enhancing skill development programmes for construction workers and providing incentives for hiring locally could further amplify these benefits.
As the Union Budget 2025 nears, the urban development sector stands at a crossroads. The government’s policy decisions have the potential to reshape the sector’s trajectory, addressing critical challenges while leveraging emerging opportunities. I am optimistic about the budget’s ability to create a more inclusive, sustainable, and dynamic urban development ecosystem. These changes could address critical affordability challenges and create a more inclusive and supportive framework for private users and individuals with special mobility needs.
This article is authored by Aman Moudgil, Director, Gilco Global.
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