How to Grow the Real Estate Market in India through MSMEs

MSMEs are essential to growth, employment, and innovation in India and will have a huge impact on the country’s future. With its impressive 30% GDP contribution, this sector is expected to significantly impact India’s economic environment and growth prospects.

A report states that the MSME sector employs over 14 crore people at the moment. Additionally, experts estimate that the MSME sector will be valued at $1 trillion by 2028, indicating that there are a tonne of opportunities waiting to be explored in this enormous market.

The focus is currently on how MSMEs will transform the real estate market and how one should not discount its potential reach, given the rising numbers and encouraging statistics.

Role of MSMEs in the Real Estate Industry

MSMEs include suppliers, contractors, consultants, and construction companies. About 8% of India’s GDP is currently in the construction industry, which is expected to grow to become the third largest in the coming years.

Since many companies in this industry are unorganized, there is a chance to officially register as MSMEs. The real estate industry has demonstrated the ability to achieve sustained growth despite global headwinds and inflationary pressures, and the contribution of MSMEs to this growth spurt cannot be discounted.

Trends in the MSME sector in India

Real estate MSMEs can offer several advantages, including zero collateral loans, low interest rates, and the exception of electricity consumption. Maintaining a track record of timely project completion coupled with cash flow management and a formal documentation process is essential for MSMEs in the real estate industry.

Small developers may encounter difficulties obtaining project funding in the real estate industry, as established developers typically look to commercial banks, private equity, and other sources for funding. For this sector to grow, MSME infrastructure upgrades and digitalization of the business will be essential.

MSME registration has advantages for the construction industry as well. If a company registers as an MSME, it can benefit from the expansion of the construction industry. These companies can provide products and services to major construction companies.

In addition, the government increased the infrastructure budget by 33% in the union budget for 2023–2024, acknowledging the importance of infrastructure in promoting sustainable growth. MSMEs can support large construction companies operating in these areas. Additionally, MSMEs have access to suppliers of cement, steel, and other building supplies.

Becoming a Registered MSMEs: Real Estate

Banks and financial institutions that register as MSMEs can lend money to developers without requiring them to pledge any assets as security. Additionally, free ISO certification and lower interest rates are available to registered developers. MSMEs with Udyam registrations may be eligible for financial assistance from ISO certificates to become certified. MSMEs that have registered can receive a 50% subsidy on the entire cost of registration to protect their innovations.

MSMEs’ Importance

MSMEs serve the growing middle class in India while operating with agility. It is admirable that the industry is so flexible and adaptable. The personal connection is strong since most businesses operate according to the needs and preferences of their clients.

One of the biggest employers in India outside of the rural areas is MSMEs. Their capital and technology requirements are low, and they employ more than 40% of the workforce. It should be one of the cornerstones of the “Make in India” initiative. Their middle-class approach allows them to start with minimal resources and offer flexibility. Consequently, long-term decision-making becomes effective.

Additionally, they encourage resource mobilization and capacity building, which allows small business owners to create innovative products. The best part is that these firms provide semi-finished and auxiliary products to multinational corporations. MSMEs have the power to build a just and inclusive society. They have the potential to propel the country’s growth.

Future Outlook: MSMEs and Real Estate

Lending to MSMEs in the real estate sector will expand over the coming years as more private companies increase their exposure to this market. Financial firms using AI-powered predictive analysis and credit scoring would ideally modernize the lending market. Growing their projects would help the construction companies.

Another essential component of driving the sector is upgrading the MSME infrastructure. Developers will be strongly incentivized from the physical infrastructure perspective by project-specific incentives like power consumption and land cost rebates.

Also, MSMEs in the manufacturing sector will benefit from the 75,000 crore proposal for transport infrastructure projects in India. Small developers will become more professional with the establishment of various skill-development centers and business mentoring services for things like real estate industry compliance with RERA.

Finally, the various policy incentives that the Indian Central and State Governments have announced will benefit MSMEs in the real estate industry. Over the next ten years, there will be plenty of opportunities due to India’s changing MSME landscape.

MSMEs have the potential to significantly enhance India’s economic growth and prosperity through simplified regulations and easier access to loans. Although the government has been assisting MSMEs and their initiatives, the main goal ought to be achieving the results. Prepare for the MSMEs-driven revolution in the real estate industry.