Real estate ancillary industries counting on ‘stress fund’ for revival

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NEW DELHI: Real estate ancillary industriesNSE -1.64 % such as elevator, tile and pipe manufacturers are counting on the government’s Rs 25,000 crore stress fund for reviving stalled projects to improve their business prospects.

IndiaMART, an online B2B marketplace connecting buyers and suppliers, said growth in queries had fallen 50% and the government’s intervention will help revive the ancillary industries.

Lift manufacturers and makers of tiles, sanitaryware, faucets and plastic pipes claimed that after housingNSE -0.77 % projects stalled, payment for orders worth several crores of rupees have been pending, two people with knowledge of the matter said.

“We hope that the introduction of the stress fund for stalled real estate and housing projects will be a much-needed relief, both for homebuyers and for millions of small businesses involved in the sector,” said Dinesh Agarwal, managing director of IndiaMARTNSE -0.15 %.

Agarwal said growth has slowed for cement, tiles and sanitaryware, construction equipment, elevators and escalators, UPVC doors, windows and glass.

The real estate sector and the construction industry together form the second-largest employer in India. Once construction of housing projects resumes, ancillary industries expect to get more business.

“This (stress fund) will also then have a multiplier effect, having a positive impact on numerous ancillary industries. This gives a signal that RERA (Real Estate (Regulation and Development) Act)-registered positive projects will need to be completed on time and some of these funds will help with these pending real estate projects, further helping in job creation in the sector,” said Amit Gossain, managing director of elevator maker KONE India.

Gossain said growth in the elevator industry has stagnated and although the commercial segment has started to pick up, it is the residential segment that matters.

“Impetus to the housing market to revive over 1,600 stalled housing projects covering 458,000 units also brings in a huge economic cycle in play, not just for real estate market, but also for the 27 ancillary industries connected, hence creating a huge employment opportunity canvas across the country,” said Amit Modi, director of ABA Corp., a real estate developer based in Noida.