Yes as per the DC regulation 33 (7) it is necessary to give free fungible FSI of 35%. The recent amendment to DCR makes it possible. If suppose the area is 300 sq ft then additional 105 sq ft of area as fungible FSI is to alloted to tenant. There's also a corpus fund of 1 lac to be given to tenants.

1)  As per Re development rule of DCR 33(7) tenants should get 35% fungible FSI. 

Builder should give fungible FSI of 35 per cent to tenants of ceased buildings 

compensatory FSI for the rehab portion is “free of premium’’, but it is up to the builder to provide the extra area to the tenant or flat owner

Tenants should insist that 35 per cent fungible FSI be given to tenants for redevelopment

Fungible Floor Space Index (FSI) is the additional floor area developed by the builder over and above the FSI limit set by the government

The existing flat owners and in the other redevelopment like slum, cess buildings etc, the existing tenants will be given fungible FSI for construction free of FSI .

Under the new DCR , areas for balcony, flower beds, voids, terraces, niches would be counted in the FSI.

These were not considered in the earlier  FSI calculations.

To compensate for this loss in FSII the government has allowed compensatory fungible FSI up to 35% for residential developments.

Thus it is a rule hence you may decide whether it is compulsory or not.

This can be used for bigger habitable areas or for balcony or flower beds or terraces or voids or niches. 

Amended DCR approved by the state government in the last Jan 2012 grant 35% compensatory FSI free to the rehab component of the redevelopment project.

The tenants and the  housing societies  have to bargain hard with the builders for the extra 35% area. 

Tenants are currently entitled to 300-700 sq. ft houses free  when their buildings are redeveloped.

The 35% extra FSI will be on the built area of the existing flat.

It will be as per dcr rules you can't reduce the same. 

tenants will get ownership flats in the new building including the fungible FSI of 35%.

yes it is ok. 

Please take a final opinion from one local lawyer 

yes it is compulsory

because the Fungible FSI applicable on rehab component cannot be used for sale component

so as it is you wont get any benefit by giving lesser FSI as you cannot use that unused FSI on the free sale component

additionally the tenant or tenants can sue you for not giving the benefit of fungible FSI despite getting it free of cost from BMC

Yes. It is compulsory to give free fungible FSI of 35% to tenants of cessed buildings under redevelopment under DC Regulation 33(7).

You would be prone to a lot of litigation if less than  35% fungible FSI is given to tenants of cessed buildings under redevelopment of DCR 33(7).

Dear client 

Yes it is compulsory to give free fungible area to tenants under redevelopment of cess buildings under Development control rules 1991