Mumbai Cluster Development Policy: Government Announces Additional Incentives To Drive Redevelopment Of City’s Old Structures

In an effort to encourage the revamping of old structures in Mumbai, the Maharashtra government has declared a 50 per cent premium waiver payable by real estate developers for its ‘Cluster Development Policy’ for a period of one year.

Following the state cabinet meeting, Maharashtra Chief Minister Eknath Shinde emphasised that the implementation of this initiative will facilitate the redevelopment of old and dilapidated buildings in the city.

Shinde said, "In Mumbai, for cluster development we have decided to give a push. This will ensure redevelopment of hundreds of old and dilapidated buildings that are stuck. For this, we have decided to give 50 per cent waiver in premium for redevelopment of such buildings, and lakhs of citizens will get benefit due to this.", reports Money Control.

Further, Deputy Chief Minister and Housing Minister Devendra Fadnavis said, "We have introduced this one- year-long scheme to push cluster redevelopment in the city, and this is also one way of generating stock of more affordable housing in the city. For now, we have not kept the scheme for unlimited time, and it will be valid for only those proposals that come in the period of one year".

The premium refers to the various fees imposed by the authority for obtaining approvals related to different aspects while initiating, progressing, and completing the project.

These charges include the fungible premium — which is paid for additional floor space index (FSI).

It further includes the open space deficiency premium, the premium for expanding the ground coverage for construction purposes, as well as premiums for lobbies, lift wells, staircase facilities, and other relevant components.

Cluster Development in Mumbai

The cluster development policy involves combined redevelopment of multiple plots or buildings by forming a cluster.

In order to support the renewal of old buildings in Mumbai, the state government has been offering developers various incentives — including additional floor space index (FSI).

As part of these incentives, the new provision to grant developers a 50 per cent waiver on premiums has now been introduced.

In previous years, the scheme has not gained much traction, even with the provision of a higher FSI.

According to city developers, this lack of interest can be attributed to the requirement that the plot size should be a minimum of 6,000 square metres in the suburbs and 4,000 square metres in the city.

They argue that cluster redevelopment will only achieve success if the minimum plot size requirement is lowered.

In Mumbai, there are close to 300 extremely dangerous buildings and the figure of dilapidated buildings run in thousands.

In addition, the Brihanmumbai Municipal Corporation (BMC) in a letter dated April 27 highlighted the lack of incentives as one of the factors for the low interest in the scheme.

It further stated that the proposal process — which involves fulfilling technical requirements and obtaining approvals from residents, among other steps, takes more than two years.

Consequently, only a few individuals have been able to take advantage of the incentives provided on the cess, reports Indian Express.

It emphasised the need for further promotion of the scheme as it is the only way to undertake the redevelopment of Mumbai — especially the city area — where buildings are constructed in a congested space.

Following several reports, many developers also pointed out that cluster development addresses the challenges of urban growth, inadequate infrastructure and ageing buildings by providing enhanced infrastructure.