Union Budget Paves Way For Green Building Boom In India

As India stands on the edge of an unprecedented green transformation, the real estate sector is poised to play a pivotal role in driving sustainable development. The Union Budget 2024, presented by Finance Minister Nirmala Sitharaman, has laid out a comprehensive roadmap that aligns with India’s commitment to achieving a net-zero carbon footprint by 2070.

However, the conversation must now pivot from general sustainability measures to the specific and urgent need for green buildings in India's rapidly urbanising landscape.  

The Importance of Green Buildings in India  

Green buildings are crucial for India’s sustainable development, addressing the country's growing need for urbanisation while minimising environmental impact. These structures are designed to optimise energy efficiency, reduce water consumption, and improve indoor air quality using eco-friendly materials and innovative construction techniques.   

Green buildings are designed to reduce energy consumption by 20–30 percent, lower water usage by up to 50 percent, and minimise waste, all while providing healthier living environments. The benefits extend beyond the environment; green buildings have been shown to increase property values by up to 10 percent, reduce operational costs, and improve occupant productivity and well-being. With the construction sector contributing to 22 percent of India’s total CO2 emissions, transitioning to green building practices is essential for reducing environmental impact and promoting sustainable development. 

Buildings certified as green can lead to operational savings of up to 14 percent within the first five years. Moreover, with increasing consumer awareness and demand for sustainable living, real estate projects that incorporate green technologies are likely to see higher market value and faster sales.  

According to globaldata.com, the green building market in India is expected to grow at a compound annual growth rate (CAGR) of more than 5 percent from 2023 to 2028. In 2023, the market was valued at $30.24 billion, and from 2017 to 2022, it grew at a CAGR of 7.5 percent. As India progresses towards its commitments under the Paris Agreement and strives to achieve its net-zero targets by 2070, the adoption of green building practices is essential for promoting sustainable growth, ensuring resource conservation, and enhancing the overall quality of life.  

The Way Forward: Embracing Sustainable Practices in Real Estate  

For India’s real estate sector to fully embrace the green building revolution, several key steps must be taken. First, we need a stronger regulatory framework that incentivises green construction practices. The government’s recent focus on developing industrial parks, corridors, and transit-orientated cities presents an ideal opportunity to integrate green building standards into these projects from the outset.  

Additionally, the availability of green financing is critical. While the government’s move to develop a "taxonomy for climate finance" is a welcome step, it must be supported by accessible financial products that encourage developers to invest in green technologies. This could include lower interest rates for green projects, tax benefits, and subsidies for adopting sustainable building materials and energy-efficient systems. The Reserve Bank of India’s inclusion of green building financing under its Priority Sector Lending (PSL) scheme is a positive move that could spur further investment in this area.  

Public awareness and education also play a crucial role. Both developers and consumers need to understand the long-term benefits of green buildings, including health, economic, and environmental advantages.

Campaigns that highlight the importance of green certifications and potential utility savings can significantly drive demand for sustainable real estate.  

Budget 2024: A Boost for Green Construction  

While the Union Budget 2024 has taken significant steps towards promoting sustainability, there is room for more targeted support for green buildings. The PM Surya Ghar Muft Bijli Yojana, which aims to install rooftop solar plants for one crore households, is a promising initiative that could complement green building efforts by providing clean, renewable energy directly to homes. According to the Ministry of New and Renewable Energy, there are 1.28 crore registrations and fourteen lakh applications already in place, showing the scheme’s potential to significantly reduce the carbon footprint of residential buildings.  

Furthermore, the budget’s allocation for offshore wind energy and the launch of a biomanufacturing scheme are steps in the right direction.

These initiatives not only promote the use of renewable energy in building operations but also encourage the adoption of sustainable materials and construction practices. The Ministry of New and Renewable Energy estimates that India could generate up to 70 GW of offshore wind power by 2030, demonstrating the scale of opportunity for integrating renewable energy into urban development.  

The future of India’s real estate sector lies in its ability to adapt to and embrace sustainable practices.  

Green buildings provide a pathway to a more resilient and environmentally responsible future, aligning with India’s broader sustainability goals. The Union Budget 2024 has set the stage for this transformation, but it is up to the industry to lead the charge in driving this change. By focussing on green building practices, India can not only reduce its carbon footprint but also create healthier, more sustainable communities for future generations. 

(Gopalakrishnan, Managing Director, Southeast Asia, and Middle East, GBCI.)