• Industry
• 4 min read

Mumbai: Developers of sea-facing projects rattled as SRA revises permissions shrinking construction area for CRZ projects

Mumbai builders are grappling with new challenges as the Slum Rehabilitation Authority revises permissions, shifting the calculation of the floor space index from gross to net plot areas. This significant change influences more than 45 redevelopment projects, especially in prime locations like Bandra and Juhu. Developers express apprehension over financial losses due to diminished construction rights, while the Brihanmumbai Municipal Corporation raises concerns about potential revenue declines from premiums.

The changes apply to projects located within the Coastal Regulation Zone (CRZ), where developers must surrender part of their land as a road-widening setback.

Under CRZ norms that took effect in 2019, the floor space index (FSI) for such plots is to be calculated on the net plot area, meaning the area remaining after land is given up for public purposes such as road widening. However, developers and officials familiar with the approvals process said SRA sanctioned plans by using the gross plot area. This allowed builders to claim a higher FSI entitlement and build more saleable area than would be available if calculated on the net area.

The approvals were issued under Regulation 33(11) of Mumbai's development control framework, a provision used for redevelopment schemes in which a developer must construct and hand over, free of cost, rehabilitation tenements for project-affected persons to SRA. In return, builders receive development rights that can make such projects financially attractive, particularly in high-value neighbourhoods along the western waterfront.

People tracking the matter said more than 45 redevelopment projects, largely concentrated in the H-West and K-West wards, have been impacted after SRA issued revised letters of intent (LOIs). Several projects are said to be located at Mount Mary, Bandstand and Pali Mala Road off Carter Road in Bandra. In several cases, work has already begun based on earlier permissions that were computed on gross area.

Market sources said the revised LOIs have reduced construction rights by several hundred square metres in affected projects. One person familiar with the recalculations said the financial impact could be significant because the projects are in some of the city's most expensive real estate corridors. In one Bandra redevelopment, the reduction is said to be as high as around 1,900 square metres, a sizeable cut given the area's pricing, where premium apartments can command rates exceeding Rs 1 lakh per sq ft.

SRA CEO Mahendra Kalyankar did not respond to queries. A senior SRA official, however, rejected the suggestion that the earlier permissions involved wrongdoing. The official also disputed the scale of the impact, saying revised LOIs had affected only about seven to eight projects, and maintained that there was no violation.

In at least one revised LOI issued to a developer for a Juhu project, SRA stated that the updated permission was being granted after applying the CRZ Notification 2019 more stringently, along with the 2022 amendment to Regulation 33(11) under DCPR 2034. The letter said FSI had been restricted in line with the revised scheme.

Sources said SRA's move to revisit earlier permissions came amid concerns that continuing with gross-area calculations could trigger wider scrutiny. They argued that if the authority intended to interpret CRZ-linked FSI differently, the state govt should have sought clarification from Union ministry of environment and forests rather than allowing unilateral approvals. According to these sources, SRA officials approved CRZ projects using gross plot area even though the CRZ framework required net-area computation once setback land was surrendered.

An architect familiar with CRZ implementation said the 2019 notification leaves little room for alternative interpretation. The architect said CRZ provisions prevail over other regulations and explicitly require FSI to be calculated on the net plot area when land is handed over for public purposes. On that basis, the architect said, extending FSI benefits on the gross area would not align with the CRZ rule.

Separately, civic officials said Brihanmumbai Municipal Corporation (BMC) has raised concerns with the state govt about the growing preference among builders to route certain proposals through SRA under Regulation 33(11). According to BMC sources, municipal commissioner Ashwini Bhide has communicated that the civic body is losing potential revenue in the form of premiums because the premiums charged by SRA are lower than those levied by BMC. BMC also believes SRA has been more accommodating in granting permissions, encouraging developers to seek SRA clearances.

The issue has broader fiscal implications because BMC relies heavily on premium collections from real estate development to fund large infrastructure projects across Mumbai. With developers chasing faster or cheaper clearances, the civic body fears a hit to its revenue base. The revised LOIs, meanwhile, have introduced uncertainty for developers who planned their project viability around higher FSI assumptions, especially where construction has already started and sales projections were tied to earlier sanctioned buildable area.