This month, in a key initiative aimed at expediting power infrastructure projects and standardising compensation practices, the Ministry of Power (MoP) issued supplementary guidelines for right-of-way compensation for transmission lines.
These new norms, released on March 21, 2025, aim to streamline the compensation process and ensure the timely resolution of disputes. The MoP stated that a committee will be formed to fix the market rate of land for laying interstate transmission system (ISTS) lines in states where no such mechanisms exist.
Under this framework, landowners will receive 100 per cent of the land value for the tower base area, while compensation for the line corridor will be determined based on the extent of land use affected by the overhead transmission lines. The land value will be calculated using the higher of two benchmarks – either the government-notified circle rate or the average sale deed rates of similar land in the past year. District collectors or deputy commissioners will be responsible for evaluating and disbursing compensation.
If the difference in market rates worked out by valuers is less than 20 per cent over the lowest value, then the average value of the two valuations will be taken as the reference market rate. If the difference exceeds 20 per cent, the Market Rate Committee (MRC) may negotiate the reference market rate. If negotiations fail, the MRC can engage a third valuer, and the reference market value will be determined as the average of the two closest valuations.
The MoP clarified that government, forest or community land compensation norms will be decided by the respective states or union territories (UTs), but they must not be lower than the central guidelines.
As these guidelines apply only to ISTS lines, Central Transmission Utility of India Limited has been tasked with ensuring compliance among all transmission licensees to prevent inconsistencies in compensation practices across states/UTs. States and UTs can adopt their own compensation structures, provided they meet or exceed the central norms. These revised guidelines apply only to future projects for which construction has not commenced and prior compensation has not been disbursed. Existing projects under execution remain unaffected.
Strengthening the transmission infrastructure is critical, given the momentum in renewable capacity addition. According to Crisil Ratings, an addition of 65-75 GW of solar and wind capacities is expected in FY2026 and FY2027.
The timely planning and commissioning of transmission capacities remains critical as the execution period of a transmission project is typically two to four years – twice that of a renewable energy project. Clearly, these guidelines come at a crucial time.