Fungible FSI in Redevelopment: Why 35% is “Free” & Why the Concept Was Introduced?

If you’ve ever been involved in a redevelopment project in Mumbai, you’ve probably heard the term Fungible FSI — especially the popular line: “35% fungible FSI is free!”

But what does that really mean? And why did the government introduce such a rule in the first place?

Let’s break it down in simple language.

🧱 First… What is FSI?

FSI (Floor Space Index), also called FAR (Floor Area Ratio), is the ratio of total permissible built-up area to the plot area.

A higher FSI means you can build more on the same land.

Example:

Plot area: 1,000 sq.ft

FSI: 1.0

Permissible built area = 1,000 sq.ft

📌 So Then… What is Fungible FSI?

Fungible FSI is additional FSI given over and above the base permissible limit.

Think of it as “extra building rights” allowed by the planning authority.

This extra FSI can be used flexibly (fungibly) for:

✔ Balconies

✔ Flower beds

✔ Niches

✔ Passages

✔ Staircase & lift area

✔ Additional flat size for existing members

✔ Any other component as per design requirement

Earlier, many of these areas were not counted in FSI — they were “free” spaces.

But from 2012 onwards, these areas started getting counted in built-up area calculations.

To compensate for this loss, the government introduced fungible FSI.

🏗️ Why is 35% Considered “Free” in Redevelopment?

For residential redevelopment projects, the government permits:

➡️ Up to 35% fungible FSI free of premium — for rehabilitation of existing members.

Meaning:

If you currently have 1,000 sq.ft carpet or BU area entitlement — you can get 350 sq.ft extra at no cost to the society.

📌 This is only for rehab portion (existing owners/tenants).

For the developer’s sale component, fungible FSI is usually chargeable to premium.

📄 Why Was Fungible FSI Introduced?

Here are the 4 major reasons:

1️⃣ To Stop Misuse of “Free” Spaces Earlier

Developers earlier exploited loopholes by adding balcony/terrace projections which weren’t counted in FSI. This led to unregulated construction.

Fungible FSI legalised what was earlier built unofficially.

2️⃣ To Protect Flat Owners in Redevelopment

If old free spaces started getting counted during redevelopment —

members would lose balcony, dry area, or size of their flats.

Free fungible FSI ensures no occupant loses space — instead they get more!

3️⃣ To Make Redevelopment Financially Viable

Extra FSI means:

✔ More saleable area

✔ Better project profitability

✔ Faster approval from societies & developers

Without it → many old buildings may never get redeveloped.

4️⃣ To Bring Transparency & Better Urban Control

Fungible FSI ensures:

• No hidden add-ons

• Everything counted officially

• Clear rules for design/approvals

A cleaner, fairer redevelopment ecosystem.

💡 Practical Impact for Societies

Without fungible FSI:

❌ Members may receive smaller flats after redevelopment

❌ Developer may find the project unviable

❌ Amenities like balconies would be cut down

With fungible FSI:

✔ Bigger rehab flats

✔ Better amenities

✔ Stronger negotiating power for society

✔ Improved living standards

📌 Key Points to Remember

Factor Impact

Fungible FSI availability Up to 35% for residential redevelopments

Premium applicability Free for rehab, premium may apply for sale area

Usage flexibility Can be used for any part of building design

Purpose To ensure residents gain and redevelopment remains viable

🎯 Final Word

Fungible FSI is one of the most important tools that has transformed Mumbai’s redevelopment landscape. It:

• safeguards residents’ rights,

• encourages safer and modern buildings, and

• helps optimise limited urban land.

So the next time someone mentions “35% free fungible FSI”, you know it’s more than just a technical real-estate buzzword —

it’s a crucial benefit designed to protect societies undergoing redevelopment.