Business Standard, Mumbai Edition - January, 2006

Real estate developers are staring at what could be an opportunity loss of a staggering Rs 3,000 crore, following a September 2005 draft notification that makes environmental impact assessment (EIA) mandatory for all real estate developments. Issued by the ministry of environment and forests for projects of over 20,000sq mt, the loss for the booming IT and ITES sector alone could be to the tune of Rs 1,650 crore, while the hospitality sector could faces losses up to Rs 182.9 crore. The multiplier effect on the GDP from setbacks to the hospitality industry alone could add up to as much as Rs 1,865.4 crore says an Ernst & Young study, commissioned by the confederation of Real Estate Developers Associations of India (CREDAI). 

The notification calls for all construction projects that comprise a built-up area over 1,00,000 sq mt, townships and settlements covering 100 hectares, and special zones such as IT and bio-tech parks and SEZs covering over 50 hectares, to be approved by the central government. Similar approvals would be needed from state governments for developments of 20,000 sq mt and townships of 50 hectares.

The loss is likely to be caused by the time taken to get these approvals. According to CREDAI estimates, nearly 5,000 projects over 20,000 sq mt have been coming for development in the past two years. Seeking government approvals along with EIA for such projects could cause a delay of upto 450 working days.

The delay in project development could stretch from 120 days for a project not requiring EIA, to 254-450 days for projects which require EIA clearance.” The procedure for getting the clearance seems very long, complex and cumbersome, resulting in a significant amount of delay in the project extending to 1-2 years.” The study notes.

The report divides the time likely to be taken over each stage of the project as:

• 60 days for screening and submission of draft EIA report
• 74-120 days for public hearings and submission of the final EIA report.
• 74-20 days for project appraisal.
• 60-150 days for grant or rejection of application.

Says Kumar Gera, Chairman CREDAI, “The proposal can create havoc for the real estate industry. Residential and commercial developments are being seen on par with nuclear power plants or chemical plants which emit poisonous gases or discharge effluents. The move will affect IT and BT parks, airports, ports and all the other infrasturcture.”

The report suggest that at the macro level the government should examine the existing masterplans for cities and towns, ensuring that all development plans within the plan area would be considered for EIA and would not require separate clearances. It also suggests that EIAs should be implemented in phases.

The report suggests that approvals be granted at local or state levels. It also suggests the government set up an independent expert committee whose decisions would be binding on all regulatory bodies. These measures would ensure a less time consuming process and allow for a smooth implementation of the project