Gujarat’s Cross-City TDR Model: Reforming Urban Land Use Strategy

Introduction

Transferable Development Rights (TDRs) are zoning instruments that help developers to transfer unused development potential from one parcel of land to another, allowing the owner to sell the development rights of the land. They are of four types: road, reserved plots, slum, and heritage TDR. These instruments were used within the jurisdiction of a single independent municipality and were governed by the Development Control Regulations (DCR) and state-level planning acts. Yet limited land, slow redevelopment processes, and inconsistent governance have slowed progress toward true urban transformation. To tackle these, Gujarat rolled out India’s first inter-city TDR in June 2025, allowing the development rights to be moved seamlessly across boundaries, i.e., to be issued in one city and used in another. This new architecture creates India’s first regional market for development rights, unlocking the latent land value across Gujarat.

The pilot program currently encompasses five major urban centres - Ahmedabad, Surat, Vadodara, Rajkot, and other participating cities - creating a potential regional marketplace worth hundreds of crores. With Ahmedabad alone generating Rs 1,700 crore from slum TDRs and AMC estimating an additional Rs 1,000 crore annually from unused FSI sales, the cross-city model promises to unlock significantly greater value across Gujarat's urban landscape.

Legal and Regulatory Architecture Behind Gujarat’s Inter-City TDR Policy

The Legal basis of this scheme is based on the Gujarat Town Planning and Urban Development (Amendment) Act, 2017, which permits cross-jurisdictional transfers. The Gujarat TPUD Act, along with the Comprehensive Development Control Regulations (CDCR, 2017), gives technical and procedural details for the issuance, valuation, and redemption of cross-city TDR. Beyond the technical rules, Gujarat’s Urban Development & Urban Housing Development (UDHD) provides a detailed operations manual enabling operationalization of the state’s first regional TDR market. It also defined eligible categories of sending areas, such as slums, heritage zones, and public land, and enabled local authorities to grant TDRs under sanctioned town planning policies.

Together, these laws create a clear framework to back this inter-city TDR policy in Gujarat. They codified the eligibility criteria and municipal authority over issuance. The structure framed through these laws legitimizes the cross-jurisdictional transfer of development rights and also provides regulatory certainty for its allocation, monitoring, and enforcement.

 Why & How Gujarat’s TDR Policy transitioned from Intra-City Mechanisms to Inter-City Strategy.

Earlier, Gujarat followed the traditional TDR policy, a localized, intra-city format that mirrored the early experiences of similar policies as seen in cities like Mumbai and Pune, where TDR incentivized urban redevelopment. Whether a plot could issue or use TDRs depended on municipal zoning, and every urban local body tracked these rights through standard, paper-based procedures.

The intra-city approach soon hit several limitations. Local TDR markets were messy, prices varied wildly, and supply rarely matched demand. The valuation of TDR was highly inconsistent across zones. Demand for additional floor space was not uniform; in some cities, developers wanted additional floor space Index (FSI) but faced scarcity, while in others, there were no buyers for surplus certificates. Demand was concentrated in growing cities like Ahmedabad, Surat, and Vadodara, and could not be efficiently redirected, leading to overall underutilization of TDR as a tool to incentivize equitable redevelopment.

To tackle these, Gujarat followed recommendations from expert committees, NITI Aayog’s urban policy guidelines, and referenced innovations of other states. Through these, the state crafted an integrated inter-city TDR model, which allowed developers to source TDRs generated from one municipality and use them for development projects in high-demand cities.

This transition broke the jurisdictional barriers constraining TDR markets and marked a shift in Gujarat’s urban land policy. To make the system work, Gujarat needed major regulatory fixes, from a uniform valuation method that curbs arbitrary pricing to a central e-registry for tracking certificates.  The establishment of city-level implementation committees to coordinate, oversee inter-jurisdictional approvals, and resolve disputes was done to ensure smooth transfers.

The new design will overcome three major limitations of the previous arrangement: (a) the market illiquidity existing in sending areas, which remained underutilized as they could not be monetized within local boundaries, (b) Pricing Distortions, and (c) the spatial mismatch between redevelopment needs and the demand of developers. All of these were addressed through the creation of a regional market for TDR rights through this inter-city policy.

Here's how this works in practice: Under the new system, a developer planning a commercial complex in Surat's booming textile district could purchase TDR generated from a heritage building conservation project in Bhavnagar or from slum rehabilitation in Rajkot. Previously, the Bhavnagar heritage TDR might have remained unused due to limited local demand, while the Surat developer faced FSI constraints. The inter-city framework creates a win-win scenario - heritage gets preserved, slums get redeveloped, and commercial projects get the development rights they need.

In short, Gujarat’s move from an intra-city to an inter-city TDR framework has not only made urban development methods more efficient and sustainable but also set a national benchmark by shifting from a scatter city-level scheme to a regional land policy.

Analytical Assessment - Opportunities, Risks, and Legal-urban Challenges in Implementation

Opportunities

• Better Utilization - The Inter-city TDR framework, allowing developers to transfer the unutilised development rights (FSI/ FAR) of “sending areas” (underutilized land, e.g., Landlocked parcels in Vadodara or Rajkot) to “receiving areas” (high-demand cities like Ahmedabad), has helped to create the state’s first genuine regional market for developmental rights. This should unlock idle government land, fund slum rehabilitation, and make land use more efficient.

• Financial and administrative benefits – The economic pressure on municipal bodies will reduce because private developers will be encouraged to undertake larger redevelopment projects due to the incentives provided by TDR. This will mobilize private capital for the development of slum areas and the replanning of the urban regions without the expenditure of the government. Establishment of dedicated city-specific committees will also help to streamline the implementation of TDR transactions and increase transparency.

Consider a real-world scenario: Cosmos Realtors, currently involved in TDR-related litigation with GST authorities in the Gujarat High Court, represents the kind of developer who could benefit immensely from the inter-city system. Instead of being limited to local TDR sources, they could now source development rights from heritage conservation in Gandhinagar (where over 500 acres of green cover have been preserved through TDR) and use them for high-rise projects in Ahmedabad's expanding commercial zones. This flexibility could potentially reduce project costs by 10-15% while accelerating approval timelines.

Risks -

• Market volatility – The risk of market distortion and inequities due to speculative trading is heightened because the inter-city TDR can be freely sold and bought between different urban centres. This unregulated trade can cause inflation in real estate pricing, leading to uneven growth and undermining affordable housing goals, resulting in privileging the developed receiving cities while the sending areas remain underdeveloped due to inadequate investment.

Legal-urban challenges -

• Legal and Regulatory Ambiguities - The inter-city TDR policy faces legal hurdles because the statutes backing it permit the use of TDR for redevelopment and rehabilitation, but do not provide detailed procedures for inter-city transactions. The TDR scheme was already inconsistent, evident by the fact that in Ahmedabad, a city known for its heritage structures, only 99 heritage TDRs have been issued in a decade, and now, with this inter-city model, coupled with regulatory vagueness, it will further complicate its implementation.

• Fragmented governance and implementation gaps - Effective rollout of this plan is hampered due to the absence of a centralized trading platform, making these inter-municipality TDRs lack robust oversight, consistent regulatory updates, and real-time tracking. To give promising results, the policy must address hurdles like equitable distribution, transparency, and private-public balance.

Conclusion: Policy implications for the Future trajectory of Gujarat’s inter-city TDR Model

With its inter-city TDR framework, Gujarat marks a significant step towards transformation from individual municipality boundaries to a regional market for development rights across its urban centres. This approach will help find solutions to urban challenges like slum rehabilitation, utilization of defunct industrial land, optimization of transport hubs, and productive use of idle government land. It will also reduce the fiscal burden on the state treasury by leveraging private investment. This market-driven approach also aligns with the broader goal of affordable housing, infrastructure utilization, and fostering strategic growth.

These cross-city markets must have clear rules and transparency. City-specific committees, formed to streamline approvals and oversee the execution of this policy, must lay down specified issuance and usage guidelines to develop a robust monitoring framework.

The present legal framework needs to be amended in order to include procedures and explicit rules for complex inter-city transfers. This will standardize the valuation criteria and establish clear obligations, thus making the inter-city TDR model more reliable, bankable, and acceptable to the market.

The state should draw on innovations like Mumbai’s e-TDR exchange, where a nodal bank manages transactions, and development rights certificates exist only in digital form. This will boost the volume of the transactions and allow common citizens to buy TDR as an investment, thus bringing transparency and new opportunities for market participation, and reducing reliance on brokers to buy small amounts of DRC. Special implementation guides, as used in Maharashtra to aid civic bodies and developers in adapting to this new system, will ensure that these TDR tools are managed effectively.

Gujarat’s inter-city TDR framework can be made a powerful lever, catalysing sustainable redevelopment and urban growth if its framework is consistent with market needs and governance reforms. With continued efforts towards standardizing and integrating the TDR with the smart-city initiatives, Gujarat can create a scalable and equitable model that could become a national benchmark for an inclusive and balanced urban growth.