An Analysis of Transferable Development Rights in Telangana
Introduction
The state of Telangana and particularly its capital Hyderabad has undergone rapid urbanisation which led to a dramatic increase in demand for adequate infrastructure in public space including roads. Such growth has resulted in tremendous burden and cost on the local governments to acquire land to accommodate the growth. For these additional costs, the metropolitan planning organisations such as the Hyderabad Metropolitan Development Authority (“HMDA”) and Greater Hyderabad Municipal Corporation (“GHMC”) have developed the mechanism of Transferable Development Rights ("TDR"). Transitioning from cash compensation to TDR has provided the state with an efficient way of acquiring land for public infrastructure.
Definition of Transferable Development Rights
TDR is defined under Rule 2(i) of the Telangana Building Rules, 2012 notified under G.O. Ms. No. 168 dated April 04, 2012 (“Building Rules”), as “an award specifying the built up area an owner of a site or plot can sell or dispose or utilise elsewhere, in lieu of surrendering land free of cost which is required to be set apart or affected for public purpose as per the Master Plan or in road widening or covered in recreational use zone, etc.”
This compensatory award is formally issued by the competent authority in the form of a recognised TDR certificate (“TDR Certificate”).
Statutory Framework Governing TDR in Telangana
Section 35 of the HMDA Act, 2008 recognises the acquisition of land by way of TDR. The HMDA or local authority with the consent of the landowner can acquire land required for public purposes by issuing a TDR Certificate in lieu of monetary compensation. Furthermore, the Building Rules include specific situations and cases in which the TDR Certificates may be legally issued.
The Supreme Court in Janhit Manch and another vs. State of Maharashtra[1] held that “TDR is a voluntary, incentive-based programme allowing landowners to sell development rights from their land to a developer, or to other interested parties, who can then use these rights to increase the density of development at another designated location”.
TDR Entitlement
Rule 16 of the Building Rules deals with land affected by master plan roads, circulation networks or road widening. In such cases, owners are required to surrender the affected portion without any consideration in order to obtain permission for development. Post surrendering of such land, the owners are entitled to TDR under Rule 17 of the Building Rules. Rule 17 of Building Rules provides for the quantum of TDR and conditions for grant of TDR. As a mandatory precondition, the relevant land has to be transferred to the local body or urban development authority by a registered gift deed.
The entitlement differs according to public purpose:
- For land surrendered for master plan roads or road development plan: TDR up to 200% of the built-up area corresponding to the surrendered land.
- For lakes, water bodies, nalas foreshores and recreational buffers: TDR equal to 100% of the built-up area of the recreational buffer developed at the cost of the owner.
- For heritage buildings and precincts with adaptive reuse: TDR equal to 100% on the built-up area of the site.
Liberalisation of TDR Use
Earlier, TDR Certificates were utilised only within the territorial jurisdiction of the issuing authority such as GHMC or HMDA. This meant that TDR Certificate could be used only for development projects located within territorial limits of the authority. To aid in resolving the issues arising from such limited use, G.O. Ms. No. 264 dated November 5, 2019, was issued by the Government of Telangana (“State Government”) to amend the Building Rules. One such change was to include an additional clause to Rule 17(c) of the Building Rules allowing the use or disposal of any TDR Certificate issued by GHMC or HMDA or Telangana State Industrial Infrastructure Corporation anywhere within Outer Ring Road (“ORR”), regardless of which authority issued such TDR.
Further, G.O. Ms. No. 235 dated December 12, 2022 was issued by the State Government to liberalise the rules with respect to TDR by further amending Rule 17(c) of the Building Rules by replacing the word ‘ORR limits’ to ‘HMDA area,’ meaning that there is now much greater opportunity for TDR to be used throughout the entire HMDA area.
Recent Amendment to TDR for FTL, MFL and Buffer Zones (2026)
G.O. Ms. No. 16, dated January 16, 2026, was issued by the State Government. This G.O. amends the Building Rules with the addition of Rule 17(f), which relates to lands subject to the Full Tank Level (“FTL”) of lakes, Maximum Flood Level (“MFL”) of rivers, buffers around lakes and rivers, and widening of nalas. This program pertains only to applications received after the adoption of the new rules and applies solely to the core urban area, which implies a targeted legislation that addresses environmental and flooding concerns in the prime metropolitan area.
The order prescribes differentiated and enhanced TDR entitlements as set out below:
- For lands within FTL of lakes or MFL of rivers: TDR equal to 200% of the builtup area of the surrendered land.
- For buffer zones of lakes and rivers: TDR equal to 300% of the surrendered area.
- For buffer areas surrendered for public purposes (other than conservation and development works): TDR equal to 400% of the area, on par with major roadwidening entitlements.
- For private nala widening where the nalas are not shown in revenue records: TDR equal to 400% of the surrendered area.
Conclusion
TDR framework in the state of Telangana and more particularly in Hyderabad is an active policy decision to change the cash-based land acquisition system and to implement a development rights system, which does not only reduce the fiscal strain on urban local governments, but also provides an efficient way of developing public infrastructure. The most recent additions to FTL/MFL and buffer-zone lands is an indication that TDR is being used not only as a financial tool, but a fundamental part of sustainable metropolitan governance.
References
[1] Janhit Manch through its president Bhagyanji Rajyani and another vs. State of Maharashtra (2019) 2 SCC 505.