Development of MIDC plots by utilization of minimum 40% FSI

Maharashtra Industrial Development Corporation (MIDC) is a lead entity for development of Industrial Area in Maharashtra. With the aim of developing industrial areas the MIDC has been acquiring land from the farmers, developing infrastructure and allot industrial plots to the firms / companies to carry out their manufacturing/industrial activities.  However, it was noticed by the MIDC that the plots allotted to the firms / companies were not being fully utilised. Some Plot holders carried out minimum construction as per MIDC policy and obtain the BCC to avoid payment of penalty to MIDC but did not either utilised the balance area or commenced the production.   To stop this practice of land hoarding, the  MIDC has decided to raise the FSI limit for minimum utilisation and added a clause of production to improve availability of plots for the new industries. This article highlights the FSI norms for Industrial Plots

According to earlier guidelines of the MIDC the Firms /companies were required to use minimum 10% of the FSI which was subsequently revised to 20%  in year 2012 and then to 40% in year 2019. The main objective of this document is to bring out the salient features of various MIDC circulars on FSI norms for Industrial Plots which has been timely amended to develop manufacturing and service industries in Maharashtra.

MIDC Circular No. 152 dated 17 April 2012 for revision of Minimum Utilization from 10 to 20 % of FSI

The Salient features of this circular are as under:-

• The minimum utilisation of FSI was enhanced from 10% to 20%. The unit holders have to develop the plot and utilise minimum 20% FSI within stipulated development period. If plot holder is unable to utilised minimum 20% FSI within the stipulated time period then he is liable to pay the time extension charges as per policy until utilisation of 20% FSI and commencement of   production.

• If the construction is not done as per approved plan or if the unit has not gone into production after utilising of minimum 20% FSI, then he is liable to pay extension charges as per policy till construction is done as per the approved plan and unit goes into production.

• While applying for new allotment of plot phase wise development should be clearly mentioned in the Project Report which must include utilisation of 20% FSI in the First Phase.

• Extension charges as per policy should be payable if the unit has not gone into production after utilising minimum 20% FSI and Water charges should be payable  1.5 times of the prevailing rate.

• If the construction is of multi-storey building as per the Project Report submitted for allotment of plot,  and the plot holder completed 20% construction but it is not possible to go into production until the construction of above floors is done, in such case extension charges are applicable till the construction  is completed and unit has gone into production

• If the Part BCC is issued in that case extension charges are applicable till the construction is completed as per approved plan and BCC is issued, Final Lease will be executed only after construction is completed as per Project Report.

• This Circular is also applicable for the cases where Plans for more than 20% construction is approved but still BCC is not obtained and production is not started.

• This rule of minimum 20% construction is not applicable to Industries like Fabrication, Dal Mill, Pipe Industries etc. where more open space is required for which the  approval of CEO is taken. But the unit holder must complete the construction as per project report and start production in stipulated time period.

Those plot holders who have obtained the Part BCC will be charged Water charges  1.5 times of the prevailing rate till the time they obtain the Minimum 20% FSI and start production. 

MIDC Circular No C-0579 dated 21 June 2019 for revision of Minimum Utilization from 20 to 40 % of FSI

The Salient features of FSI norms for Industrial Plots(this circular) are as under:-

• Plot holder who has obtained BCC for less than 40%  should utilised minimum 40% FSI within 2 years from the date of issuance of this circular.
• Non Utilization chares @ rate of 10% per annum will be applicable till the issuance of BCC for minimum 40% FSI.
• Non Utilization charges are applicable for 2 year after the completion of 2 years development period as per this circular.
• If the plot holder is unable to utilise minimum 40% FSI within 2 years from issuance of this circular and completion of extension period of 2 years, in that case No further extension will be granted and MIDC will initiate the process for taking over the unutilised plot after considering the FSI used on plot as per Section 42(1) (A) of MIDC Act 1961.
• New Plots allotted henceforth will have to utilise minimum 40% FSI within stipulated time period and MIDC would  mention the same in Offer Letter, Allotment Letter and Agreement to Lease.
• This circular is not applicable to plot allotted for Mega Projects where development is done in a phased manner and effective steps for development have been taken by the company.
• Units which require more open space for their activity would be exempted from the applicability of this circular subject to taking the remarks from Technical Advisor and planning department and approval of CEO.
• Regional Officer within 1 month from the date of issuance of this circular shall carry out survey and issue the notice to those plot holders who have utilised less than 40% FSI.
• Clause for utilisation of 40% FSI should be mentioned in the Agreement to Lease where execution of Agreement to Lease is pending.

MIDC Circular No D-86653 dated 27 Nov 2019 clarifying applicability of circular dated 21 June 2019

Various Industrial Associations represented to MIDC and expressed their genuine concerns and difficulties due to issuance of circular dated 21st June 2019. The MIDC has therefore revised its circular dated 21st June 2019 and temporarily exempted the Plot holders who have taken the BCC before 21 June 2019 and have  gone into production.

MIDC Policy on Development Period & Extension of Time Limit

The MIDC has laid down its FSI norms for Industrial Plots and extension of time limit for all MIDC plots. These guidelines have been issued in the form of circulars issued by MIDC from time to time. To know in detail about the MIDC guidelines on development period and time extension, please click here.

MIDC vide circular (No: MIDC/CP/D98932/2022) dated 2/12/22 has given power of granting additional FSI beyond the Base FSI to CEO. The application along with the required documents needs to be submitted to CEO with the prior approval through the Chief Planner & Chief Fire Office (wherever necessary) for all industrial areas.

Analysis by ASCC

It is a very good initiative by the MIDC to enhance the minimum utilisation of FSI from 20% to 40% FSI and also ensuring that the unit must go into the production.  It will have following benefits:-

• The companies / Firms who are the genuine users and taken the extra land for the phase wise development will be forced to develop the surplus land or surrender the same to MIDC. This will not only have utilisation of the undeveloped land but also restrict the companies / firms not hoard the industrial land parcel in future.

• At present many middle men / investors get the industrial plots allotted from the MIDC by giving fake project reports. They take BCC for 20% construction by erecting some temporary shed and subsequently sell the plot at higher price. The clause of 40% construction and utilisation (i.e. production), will restrict the investors to buy the industrial property for trading.

• It will improve the availability of land thus keep a check on the rising prices of the industrial land

•  It will ensure fast development in the industrial areas of MIDC and improve employment opportunities.

•  The MIDC will have an additional source of income by charging time extension charges

However, we also feel following negative side of this circular

• The MIDC has a full proof system in place to keep a check on utilisation of FSI,  But MIDC has no system in place to check if the unit has gone into production. The MIDC must have a full proof system to keep a check if the unit has genuinely gone into production.

• The circular has given exemption to the Mega Project where the development is to be done in a phased manner. But MSME and LSI have been excluded.

•  Since the extension of time limit is not granted automatically on payment of charges, it will increase the bureaucratic hassles of obtaining time extension in case of non development.

•  The circular is silent regarding Non Development due to Non Receipt of Environment Clearance. The MIDC must give time extension without charging any premium in case the issuance of EC is delayed.

In case you want to avail any kind of services related to your existing MIDC land, or  looking to buy / sell / lease the industrial assets in any industrial area, or need assistance for any kind on industrial compliances, you may reach us

Ascent Supply Chain Consultants Private Limited (ASCC)
406 Raheja Arcade, Sector-11,
CBD Belapur,
Navi Mumbai – 400614, MH, India
Tel: 022-489-74888
E-Mail : info@ascc.in