Land procurement hiccups stall India's renewables projects

Around 60%-70% of the time goes to approvals and procurement.

Land procurement could just be Indian power developers’ biggest hurdle for getting their renewables projects off the ground, as obtaining land for solar and wind projects can take them around six to nine months, according to JMK Research. This problem escalates further in states like Karnataka, where the time period could stretch to 18-24 months.

As most of the central and state tenders are sanctioned around 12-18 months for project commissioning, around 60%-70% of the time goes to approvals and procurement, the firm said in a note. The involvement of so many entities makes the entire process highly cumbersome and time-consuming, as various agencies like the revenue department, panchayat, state nodal agencies, among others, are involved in giving approvals to procure/ lease the land.

Even if the introduction of the single window clearance mechanism by some states has greatly improved the process of granting approvals and permissions for land acquisition, there are still many issues that are leading to project delays, JMK Research said.

Firstly, there are still no formal policies for land allocation by the Governments of certain key states. At 85,000 sqkm, Rajasthan has a maximum wasteland and most of it is desert/ barren land. Erstwhile, J&K holds second spot with wasteland area of about 75,000 sqkm, which is mostly hilly area, or without grid connectivity.

Karnataka and J&K have yet to make formal policies for land allocation, said JMK Research. “Recently, J&K, Leh and Ladakh are now given the status of Union territories which are governed by the central government. Therefore, to leverage the abundant land availability in these regions central government should make plans to capitalise on the huge opportunity for solar and wind in these regions through a formal land allotment policy,” it added.

Only four states, Rajasthan, Madhya Pradesh, Maharashtra, and Gujarat, have framed adequate policies for government land allocation for renewable projects. However, even in these states, for example in Gujarat, major wind projects allotted under central government schemes are getting delayed as state government is reluctant to provide land for central projects.

Apart from the absence of land allocation policies, developers are also faced with delays in government land allotment and registration under the Solar Park scheme for ISTS projects.

JMK Research explained that the government’s move to rush auction projects in solar parks even before land acquisition formalities were completed led to significant problems and delays for developers as the required infrastructure was not ready for them to start construction even after project allotment.

“Because of this, in the Pavagada, Charanka, Bhadla, and Kadapa solar parks, bid submission deadlines for tenders have reportedly been extended repeatedly,” it said.

Under the current scenario, the Solar Energy Corporation of India (SECI) can give an extension for only three months. However, in reality, for most solar parks the delays go beyond three months.

Non-agricultural (NA) conversion of land also stands to be an issue as most state governments allow the purchase and use of agriculture land by changing the deemed land use to NA category.

JMK Research noted that currently, Madhya Pradesh, Punjab, and Rajasthan allow conversion of land use to deemed NA without charging any fee. “Whereas, the states of Andhra Pradesh and Telangana charge for these conversions. In other states, separate permissions from District Commissioner (DC) / Town Planning department/ Revenue department are required for conversion to NA,” it said.

Land records are also still not digitized, and so it takes several months to finalise the exact land coordinates and identify the rightful owners to undertake commercial negotiations.

Most states also lack an exemption on stamp duty for renewable projects. Only Punjab, Haryana, and Uttar Pradesh give 100% exemption from stamp duty for land registration for RE projects, whilst Madhya Pradesh gives 50% exemption.

JMK Research called for better coordination between state and central government agencies whilst evaluating and announcing tenders as well as the digitization of land records to streamline and expedite the land allotment process. It also recommended cutting the number of agencies involved to speed up the process of approvals and permissions.