Legal Zone

Plan of Action

November 2015
AMEET HARIANI discusses incentives for redevelopment in Mumbai.

Planning a city is a creative and complex process. One of the key elements to ensure that a city develops with all the necessary requirements for quality of life is the preparation of an organised plan for development. The infrastructure, then the residential and recreational areas, followed by the commercial and industrial sectors all need to be developed fully. A layout that helps the residents of the city to minimise travel time and enjoy a good standard of living is essential to good planning. A good development plan must also incentivise the private sector to participate. The density of a city is a function of the floor-area ratio (FAR) or floor-space index (FSI) as it is called in different areas of India. This determines how much can be constructed per square metre of land in different areas. Generally speaking, the higher the FAR or FSI, the more density populates the area. FSI or FAR is represented as a numeric value, for example, ´1.0´, ´2.0´, etc.

Different cities have individual development plans based on the physical characteristics of the city, the layout plan and infrastructure available. Further, to enable a city to regenerate itself, the older buildings and structures in the city must be rebuilt. For enabling such urban renewal, many development plans have delegated regulation, which provides specific details of incentives available for urban renewal. In Mumbai, at present, the Development Plan (DP) for 2034 is being revamped. The DP is issued under the Maharashtra Regional and Town Planning Act, 1966, which also provides for regulations being issued, which deal with the details of development permissible. Accordingly, we have the regulations for Mumbai known as the Development Control Regulations for Greater Bombay, 1991 (DC Regulations).

One of the prime methods whereby new development is promoted in place of older buildings is DC Regulation No. 33. DC Regulation 33 consists of several sub-regulations, which deal with specific avenues to incentivise the private sector to participate in this effort. This is primarily done by giving extra FAR or FSI for such reconstruction or redevelopment. Further, various schemes under Regulation 33 can be clubbed together and the additional FSI can be compounded.

Under Regulation 33, additional FSI may allowed in several categories, including the following:,

  • 33 (1) - Road widening and construction of new roads: This sub-regulation primarily provides for additional FSI on 100 per cent of the area required for road widening or construction of new roads proposed under the development plan or those proposed under the Mumbai Municipal Corporation Act, 1888.
  • 33 (4) - Residential hotels: Under this head, with the previous approval of the government and subject to payment of premium, the FSI may be permitted to be exceeded in the case of buildings of all starred category residential hotels in independents plots and under one establishment as approved by the Department of Tourism, up to total FSI specified in the DC Regulations.
  • 33 (5) - Development or Redevelopment of Housing Scheme of MHADA Layout: The FSI for a new scheme of ´low-cost housing´, implemented by MHADA for economically weaker sections of society, low income groups and middle income groups, is 3.0 plus the pro rata share of the FSI of any recreational garden or development plan road in the layout.
  • 33 (7) - Reconstruction or redevelopment by co-operative housing societies or old buildings belonging to the Municipal Corporation of Greater Mumbai (redevelopment of cessed building in island city): This is one of the most important sub-regulations of the DC Regulations, commonly used for obtaining additional FSI by builders. It essentially provides as follows:
  • (i) In case of redevelopment of 'A' category cessed buildings (constructed before 1940) undertaken by the landlord or co-operative housing societies of landlord or occupiers, the total FSI shall be 2.5 of the gross plot area, or the FSI required for rehabilitation of existing occupiers plus 50 per cent incentive FSI, whichever is higher. Under the new policy, the developer is assured of at least 50 per cent FSI for free sale. Also, the policy enables rehabilitation of all occupants on the same plot, reducing social dislocation.
  • (ii)In case of 'B' category cessed buildings (as defined therein), permissible FSI is the FSI required for rehabilitation of existing occupiers plus 50 per cent incentive FSI. The above will depend upon the number of occupiers and the actual area occupied by them. Further, no new tenancy created is taken into account while computing the permissible FSI. Similarly, tenants in unauthorised constructions made in the cessed buildings are not taken into account while computing permissible FSI.
  • 33 (10) - Rehabilitation of slum dwellers through Owners or Developers or Cooperative Housing Societies: Under this sub regulation that pertains to slum redevelopment schemes, the maximum FSI permissible on the plot is 3.0. However, where the tenement density is more than 650 tenements per hectare, the cap is 4.0.
  • 33 (13) - Development of sites reserved for resettlement and rehabilitation of project-affected persons: The permissible FSI is 2.5.
  • 33 (14) - Transit camp tenements for Slum Rehabilitation Schemes: Under this sub regulation, FSI permitted for suburbs and extended suburbs is 2.5; difficult areas comprising Dharavi and such other areas as may be notified by SRA from time to time 2.99; and island city applicable only to lands belonging to government and public-sector undertakings 2.33.
  • 33 (16) - Buildings of Information Technology establishments: Under this sub regulation, the FSI may be exceeded by 100 per cent subject to the conditions contained therein.
  • 33 (20) - Buildings of biotechnology establishments: Under this sub regulation, FSI may be exceeded by 100 per cent with respect to buildings in independent plots of biotechnology units set up by public bodies like MHADA, SEEPZ, MIDC, SICOM and CIDCO, or their jv companies or lessees of these public bodies having plots exclusively used for biotechnology units, subject to certain terms and conditions. However, premium as may be determined by the government is to be paid to the Municipal Corporation of Greater Mumbai and the government.
  • 33(24) - Development of multi-storied public car parking: This sub regulation provides for FSI Cap of 4.00 in the island city and 2.50/3.00 in the suburbs in the event of construction of multi-storied public car parking lots, owing to the shortage of parking in the city.

Often, some of these incentives lack clarity. Subjective criteria are often seen to be included in the incentive scheme. These lead to opaque methods of operation and a playing field that is not level. Undoubtedly, incentives need to be given but clear-cut incentives are the best method of ensuring that urban renewal takes place in an organised manner. The recent changes in the DC Regulations that now make things clearer are a short in the arm for urban development.

About the Author:
Ameet Hariani, Managing Partner, Hariani & Co-Advocates & Solicitors, has over 30 years of rich experience in advising clients in various fields of law including corporate and commercial laws, real estate and infrastructure, mergers and acquisitions, banking and finance, media and entertainment and pharma practice. He has represented large organisations in international arbitrations and prominent litigations.