- The PM-KUSUM land lease agreement for Component A leases farmland from a farmer to the developer.
- Set the lease term to cover the full PPA plus O&M, with a renewal option.
- Fix rent and escalation in writing; never leave the raise to a future talk.
- Land-use & stamp-duty rules vary by state — verify state revenue rules before you sign.
- Check clear title and an encumbrance certificate before any money moves.
- Have a lawyer review every lease. This page describes clauses; it is not legal advice.
A PM-KUSUM land lease agreement for Component A is the floor the whole project stands on. Get the clauses right and the plant runs for 25 years; get them wrong and the lender walks or the farmer sues. This guide describes the clauses to get right, then sends you to a lawyer to draft and check the real document.
Why the land lease matters for Component A
The land lease matters because a Component A plant is a fixed asset on someone else's ground for decades. Under PM-KUSUM, Component A is a decentralised, ground-mounted plant — often 0.5–2 MW — built on farmer or barren land that sells power to the DISCOM at a fixed tariff. The lease is what gives the developer the legal right to occupy that land for the life of the project.
Everything downstream leans on the lease. The PPA, the lender's loan and the SNA's approval all assume the developer holds secure, registered rights to the site. A weak PM-KUSUM land lease agreement for Component A can stall financing or unwind a project years later. Start at the PM-KUSUM hub for the wider scheme, then read this with a lawyer.
Who leases to whom — farmer and developer
In a Component A lease, the farmer is the lessor and the developer is the lessee. The farmer owns the land and grants the right to use it. The developer builds, owns and runs the plant and pays rent. Some farmers self-develop instead; see self-development vs developer mode for who ends up owning the project.
Name every owner, not just one
Farmland is often held jointly. If the land record shows several co-owners, every owner must sign the lease, or the agreement can be challenged. List each lessor and match names to the land record exactly. Have a lawyer review the ownership chain before any signature.
Lease term vs the PPA and O&M period
The lease term must cover the full PPA plus the O&M period. A Component A PPA commonly runs around 25 years, so a sensible lease covers that span with a renewal option. A lease that ends before the PPA leaves the plant with no legal home midway through its life.
Align the dates, then add renewal
Tie the lease start to commissioning, not signing, so construction delays do not eat the term. Add a clear renewal mechanism in case the project life extends. The exact PPA length is set per tender — treat 25 years as a working estimate and confirm against the live tender and the latest MNRE order.
Rent and escalation
The rent clause fixes how much the developer pays the farmer, when, and how it rises over time. A good clause states the annual rent, the payment date, and a fixed escalation — for example a set percentage every few years. Leaving escalation to a future conversation invites a dispute.
Put the raise in writing
Decades of inflation make a flat rent unfair to the farmer and a vague rent risky to the developer. Write the starting rent and the escalation schedule into the lease so both sides know the number for year ten. Rent levels are commercial and local — your lawyer and a valuer should sense-check them.
Land-use conversion from agricultural to non-agricultural
Most states treat a solar plant as a non-agricultural use, so the farmland may need conversion before the plant can run. The lease should say who applies for conversion and who pays for it. Land-use conversion rules vary by state and are legal-sensitive, so verify the current state revenue rules and have a lawyer review before you build.
Conversion rules are a state subject
Some states have a special, faster path for solar; others apply the standard agri-to-non-agri conversion with its own fees and timelines. A few exempt certain projects. Because the rule is set by each state's revenue department, never assume one state's process applies elsewhere. Confirm the exact route with your state revenue rules and legal counsel.
Stamp duty and registration
Stamp duty and registration give the lease legal weight, and both vary by state. The lease should name who pays the stamp duty — often the developer — and confirm the document will be registered at the sub-registrar. Stamp-duty rates and registration rules differ by state and lease term, so verify the current figure with the state and have a lawyer review.
Register a long lease
A long lease that is not registered can be weak if it is ever challenged. Lenders and the SNA often want to see a registered lease, so budget the stamp duty and registration time into the project plan. The exact stamp-duty amount is a state figure to verify, not a number to assume.
Title verification and encumbrance
Before any money moves, confirm the farmer holds clear title with no loan or dispute on the land. The lease should carry a warranty of clear title, and the developer should pull an encumbrance certificate showing the land is free of charges. Hidden bank loans or co-owner claims are exactly what lender due diligence will surface later.
Check the record first, sign second
Match the land record, the mutation entries and the names on the lease before signing. A title defect found after construction is far costlier than one found during diligence. Have a lawyer run the title search and read the encumbrance certificate as part of the lease review.
Access, security and decommissioning or restoration
Three operational clauses protect the plant for its whole life. The lease should guarantee a right of way to bring equipment in and run the line out, assign who secures and insures the site, and set out what happens at the end. Missing any of these creates a fight years down the road.
Decommissioning and restoring the land
Farmers want their land back usable when the lease ends. A restoration clause should say who removes the plant, who restores the soil, and who pays. Spell out access width, the security and insurance split, and the end-of-life duties so nobody is surprised. A lawyer should pressure-test each of these.
Dispute resolution and termination
The dispute and termination clauses decide what happens when things go wrong. The lease should name the dispute mechanism, the governing law and the venue, and define what counts as default for each side. Vague wording here means slow, costly fights and nervous lenders.
Keep exit terms balanced
One-sided termination rights scare both lenders and farmers. Define default clearly, give each side a cure period, and set out an orderly exit. Balanced, plainly worded dispute and termination clauses make the whole lease more financeable. Have a lawyer draft these to your state's law.
Component A lease clause checklist
Here is the clause set in one view — what each clause covers and the main watch-out. This is a description of typical clauses to discuss with your lawyer, not a contract to copy. Lease legality and stamp duty vary by state.
What an SNA, DISCOM or lender wants to see
An SNA, DISCOM or lender wants proof that the land is secure for the project's life. That usually means a registered land lease, clear title, an encumbrance certificate with no charge on the land, and evidence of land-use conversion where the state requires it. The lease is part of the same paper trail as the PPA and the project documents.
One clean document set
Lenders read the lease for term, rent certainty, access and balanced exit terms before they fund. Keep the registered lease, title papers, conversion order and renewal dates together and current. Because these rules vary by state and are legal-sensitive, have a lawyer review the full set before you submit it.
Common mistakes to avoid
Most lease problems are avoidable. Watch for these recurring ones — and route each back to your lawyer.
- Lease shorter than the PPA — align the term to the full PPA plus O&M, with renewal.
- No escalation clause — write the rent and the raise into the lease, not a future talk.
- Skipping land-use conversion — confirm the state rule first; it varies by state and is legal-sensitive.
- Leaving the lease unregistered — register a long lease; stamp duty and rules vary by state.
- Missing a co-owner's signature — every titleholder must sign, or the lease can be challenged.
- No restoration clause — define who removes the plant and restores the land at the end.
For how the lease sits inside the wider build-and-own decision, read the Component A developer guide. None of the points above replace legal advice — have a lawyer review your specific lease and verify your state's revenue rules.
How SuryaHub helps you manage lease documents
SuryaHub does not draft your lease — a lawyer does that — but it keeps the paperwork from slipping. SuryaHub stores the Component A land lease, title papers, conversion order and renewal dates in one project workspace, and runs the SNA and DISCOM steps alongside them, so nothing that gates financing or approval expires unnoticed. SuryaHub is pre-revenue; the only real pilots are Suryantra Energy and RGESPL, and this page is general guidance, not legal advice.
Keep every lease document in one place
See how SuryaHub tracks leases, titles and renewals across Component A projects.
Related guides
Frequently asked questions
What is a PM-KUSUM land lease agreement for Component A?+
A PM-KUSUM land lease agreement for Component A is the contract under which a farmer leases farmland to a developer to build a decentralised solar plant. The land lease agreement fixes the term, rent, access and restoration. Land-use and stamp-duty rules vary by state, so have a lawyer review the lease before signing.
How long should a Component A land lease run?+
A Component A land lease should run long enough to cover the full PPA plus the O&M period, often around 25 years, with a renewal option. A land lease that ends before the PPA leaves the plant without a home. Align the lease term with the PPA and have a lawyer review the dates and renewal terms.
Does farmland need land-use conversion for a Component A plant?+
Often yes, but it depends on the state. Many states require agricultural land to be converted to non-agricultural use before a solar plant runs, while some give solar a special path. Land-use conversion rules vary by state and are legal-sensitive, so verify the current state revenue rules and have a lawyer review before you build.
Who pays stamp duty on a PM-KUSUM land lease?+
Who pays stamp duty on a PM-KUSUM land lease is set in the agreement, and the duty itself varies by state and lease term. Many leases put the stamp duty and registration cost on the developer. Stamp duty and registration rules vary by state, so verify the current rate with the state and have a lawyer review.
Should the Component A land lease be registered?+
A long Component A land lease should usually be registered at the sub-registrar, because an unregistered long lease can be weak if challenged. Registration and stamp-duty rules vary by state. Lenders and the SNA often ask to see a registered lease, so verify the state rule and have a lawyer review and register it.
What land documents does a lender want for Component A?+
A lender for Component A typically wants the registered land lease, clear title proof, an encumbrance certificate showing no loan on the land, and evidence of land-use conversion where the state requires it. Because these rules vary by state and are legal-sensitive, have a lawyer review the full set before you submit it to a lender.
Can SuryaHub store and track Component A lease documents?+
Yes. SuryaHub keeps the Component A land lease, title papers, conversion order and renewal dates in one project workspace so nothing expires unnoticed. SuryaHub is software, not a law firm, and this is general guidance, not legal advice. SuryaHub is pre-revenue; only Suryantra Energy and RGESPL are real pilots.
Sources & references
The clause descriptions follow MNRE PM-KUSUM Component A guidelines and SECI model documents. Land-use conversion, stamp duty and agri-lease legality vary by state and are legal-sensitive — verify with your state revenue rules and legal counsel before you publish or sign anything.
- Ministry of New & Renewable Energy (MNRE) ↗
PM-KUSUM Component A scheme guidelines and the decentralised plant framework.
- SECI ↗
Model tender and project documents for Component A, where lease and land terms appear.
- Your state revenue department & SNA + legal counsel ↗
Land-use conversion, stamp duty and agri-lease legality vary by state — verify with your state revenue rules and a lawyer before you sign.
Written by the SuryaHub team · reviewed against MNRE, SECI & SNA sources · updated 19 June 2026.
Method: Clauses are described from the government and model documents above and re-checked every 30 days. This is general guidance, not legal advice — have a lawyer review your lease, and verify land-use, stamp-duty and lease-legality rules with your state revenue department. SuryaHub is pre-revenue; only Suryantra Energy and RGESPL are real pilots.
Change log: 19 Jun 2026 — first published.