India: Call for budget to stimulate housing sector
Developments in India’s housing sector reflect the state of the economy. Sales of new homes have fallen and developers are seeing margins shrink as the availability of mortgages has fallen and interest rates have climbed. According to some estimates around 20 mil. homes are required in urban areas to meet demand but activity in the sector has slowed.
As the Indian parliament begins to discuss the next fiscal budget the real estate sector is looking for a tax break similar to the 10 year tax holiday given to infrastructure companies. Representatives of the real estate sector say that providing the tax holiday will encourage them to market affordable homes on which margins are small. Increasing the stock of low cost homes is a priority for the government as it tries to reverse the expansion of slums in urban areas.
In addition to the tax relief sought, the real estate companies are calling on the government to allow greater tax deductions by home buyers on housing loan interest payments. Analysts point out that if interest rates decline this will have an immediate impact on demand.
India ranked high in Nielsen Global Consumer Confidence Index
Consumer confidence in India improved in the final quarter of 2012 according to the Nielsen Global Survey of Consumer Confidence and Spending Intentions. See press release: http://www.nielsen.com/in/en/news-insights/press-room.html.
The press release says “54% of respondents in India indicated they would put spare cash into savings, eight percentage points lower than last quarter (62% in Q3). Thirty-nine percent said they would invest in new technology and products, while 36% reported they would spend spare cash on new clothes”.
In terms of job prospects the Nielsen press release says “In the final quarter of 2012, 76 percent of online respondents in India were optimistic about their job prospects over the next 12 months, a point below the 77 percent in Q3 2012, and two points below the same period last year (78% Q4 2011)”.
Achieving a balance between mining and forestry
The planting of commercial tree species on wasteland, unused areas in non-forest lands, in agro-forestry and social forestry areas as well as along canals, roads and railway tracks offers an opportunity to meet the growing demand for timber, wood products and for raw materials for the paper and rayon industries.
Eucalyptus, casuarina, varieties of bamboos as well as shade trees such as neem, ashoka, bombax and others could contribute to improving the environment and bio-diversity.
Most of the states of India have been successfully establishing tree crops on non-forest lands, an effort that is commendable given the low forest and tree cover in the country. Currently the national tree cover is around 23% but the target is to increase this to 33%.
The success of these activities needs to be documented and promoted so that additional degraded and otherwise fallow and unused land could be identified and made available for tree crops.
The struggle to maintain the national forest cover is complicated by demands for expansion of mining concessions for iron ore and coal, many of which are in forest areas.
To try and achieve a balanced development Forest Survey of India has been given the task of identifying and mapping national pristine forests so informed decisions can be made on mining concession allocation.
Change in Forest Act brings huge benefits to forest communities
With the introduction of a Forest Rights Act and through efforts of the Tribal Affaires Ministry, the Environment Minister, Ms.Jayanthi Natarajan, succeeded in correcting the definition of bamboo from that of a tree, as defined in the Indian Forest Act of 1927, to its technical classification as a grass. This small but obviously necessary change will have a significant impact on the livelihood of rural communities.
Because of the change in definition the management, harvesting and sale of bamboo will no longer be the responsibility of the Forest Department but will fall under the Tribal Affairs Ministry. Bamboo is a major raw material for the paper and pulp industry and is thought to be worth around Rs.100 billion annually.
Because of this change in definition the benefits from bamboo production and sales, rather than going to government revenue will now be enjoyed by the rural communities where the bamboo is grown.
Sales of Teak and other hardwoods from Indian forests
During the log auctions held on 30th January 2013 approximately 14,000 cubic metres of teak logs were sold in the depots of Dang forests of Western India. Analysts report that, while overall the quality was satisfactory, the prices offered were lower than in the past auctions reflecting the current domestic economic uncertainties.
Average prices realised at the most recent auction are shown below. Prices are per cubic foot ex depot.
|Teak logs||per cubic foot ex depot|
|A quality for ship building||Rs.2500 ~ 2700|
|B quality for ship building||Rs.2400 ~ 2500|
|A quality for sawing||Rs. 2000~ 2100|
|B quality for sawing||Rs. 1900~ 2000|
|A quality Long length logs||Rs. 1800~ 1900|
|B quality Long length logs||Rs. 1700~ 1800|
|Medium Quality Saw logs||Rs. 1500 ~1700|
|Average Quality Saw logs||Rs. 1200 ~1400|
|Reject Quality Saw logs||Rs. 800~ 1000|
Haldu (Adina cordifolia) and Laurel (Terminalia tomentosa) log pricess
|Length||Girth||per cubic foot ex depot|
|3-4 m.||46 to 60 cm||Rs.200 ~250|
|3-4 m||61 to 75 cm||Rs.300 ~375|
|3-4 m||76 to 90cm||Rs.400 ~450|
|3-4 m||91 cm & up||Rs.500 ~700|
Auction of such large quantities of logs is a relief to sawmillers who have been experiencing raw material availability problems.
Increased volumes of logs are being delivered to the depots. Depots in Central India expect to auction around 30,000 cubic metres of fresh logs and the dates for the next auction are soon to be announced.
Imported Teak logs
The availability and shipment of teak logs from overseas suppliers remains steady and prices have not changed significantly.
Current C & F prices per cubic metre, delivered Indian ports are shown below:-
Imported Plantation Teak Prices (C&F)
|US$ per m3|
|Tanzania Teak sawn||450-800|
|Côte d'Ivoire logs||450-850|
|Costa Rica logs||450-650|
Variations exist based on lengths and average girths of logs in a parcel. Prices also vary with measurement allowances given for bark and sap in different countries of origin.
Domestic prices for air dried sawn timber remain unchanged as indicated below. Prices are shown as per cubic foot, ex-sawmill. Prices for imported KD (12%mc) sawn wood remain steady.
Domestic Ex-mill Sawnwood Prices for imported timbers
|Sawnwood, (Ex-mill) (AD)||Rs. per ft3|
Radiata Pine (AD)
|Sawnwood, (Ex-warehouse) (KD)||Rs per ft3|
Hemlock clear grade
Hemlock AB grade
Western Red Cedar
Good financial returns from plantations
More and more plantations of Poplar and Eucalyptus are being established to meet the growing needs for raw material. The financial returns to plantation owners are good as prices have been increasing.
Indian plywood manufacturers continue to source core and face veneers from Vietnam, Thailand, Malaysia, and Myanmar. Factories in Myanmar are said to be supplying good quality veneers and adequate quantities.
As the trend for Indian companies to build mills overseas continues more raw materials will become available enabling domestic mills to better utilize their installed capacity and meet the growing domestic demand.
Domestic Ex-warehouse Prices for Imported Plywood
|Plywood, (Ex-warehouse)||Rs per sq.ft|
Domestic Ex-warehouse Prices for Locally Manufactured Plywood
|Rs per sq.ft|
|5mm Flexible ply||Rs.30.00|