Mumbai: The Mumbai Metropolitan Region Development Authority (MMRDA) is weighing the option of granting a higher floor space index (FSI) in the ''planned city'' of Navi Mumbai in a bid to raise funds for its trans-harbour link project that will connect the island city of Mumbai with the mainland.

The Mumbai Trans Harbour Link (MTHL), now being built by the state agencies after the MMRDA rejected initial bids by Anil Ambani Group firm Reliance Infrastructure (which was the lowest bidder), is estimated to cost around Rs7,600 crore project, according to sources.

Navi Mumbai reality will soon reach saturation point at the current FSI level, and a premium on extra FSI in Navi Mumbai, which is already a hot spot for realty, could be the easiest way of raising funds for the project, the report quoted MMRDA sources as saying.

The builders lobby is already pushing plans to redevelop old and dilapidated buildings built by the City and Industrial Development Corporation (Cidco) of Maharashtra over 20 years ago, as they think redevelopment could absorb much of the pending demand for houses in the developed nodes of Navi Mumbai.

MMRDA officials say the current infrastructure of Navi Mumbai could accommodate the increased flow of population since the city's plan has already factored in population growth.

Higher FSI in Navi Mumbai would also be a better option to permitting high-rises in South and Central Mumbai where the infrastructure is already stretched to its limits.

Moreover, the 22-km-long eight-lane MTHL that would link Sewri in South Mumbai to Nhawa near Jawaharlal Nehru Port Trust, could be adding to the infrastructure constraints in the island city.

Unlike South Mumbai, Navi Mumbai has more open spaces and better infrastructure, the report said, adding, an FSI incentive could fetch crores for the government.

The government had earlier planned to impose an impact levy on the additional development rights arising from the project. It was expected that MTHL construction could lead to a boom in realty and infrastructure sectors near the sea-link.

The Maharashtra government is likely to raise the floor-space index (FSI) from one to four for the areas to be connected by the Rs 7,000-crore Mumbai Trans Harbour Link (MTHL).

The move will benefit Navi Mumbai Special Economic Zone (NMSEZ), which is being developed by Reliance Industries Ltd (RIL) in a joint venture with the Cidco.

Those who want to avail of the higher FSI will have to pay a premium of 20 per cent on the rate mentioned for the area in the ready reckoner, said a senior official from the state government's urban development ministry.

The FSI is the ratio of total floor area of a building to the size of the plot. It indicates the maximum construction allowed on a plot in a particular area.

The state government is considering various options for raising the remaining funds like levying an impact fee on property transactions in areas that benefit from the sea link, and allowing the MMRDA to commercially exploit the areas near the sea link.

The state government is also considering a similar move of granting a higher FSI at the Metro railway stations to reduce viability gap funding (VGF).

According to the state government's estimates, it will have to pay a VGF of around Rs 4,500 crore to developers. This includes around Rs1,600 crore to be paid to Reliance Infrastructure-promoted Mumbai Metro One Pvt Ltd, which is developing Mumbai's first metro line connecting Varsova, Andheri and Ghatkopar.

Work on the trans harbour link is expected to start on 26 January 2009.