Cooperative Sugar Mills
Why in News?
Cooperative sugar mills are recently in the news due to a series of significant government interventions aimed at their modernisation, financial revival, and role in India's energy transition.
Financial Support & Loans
- The National Cooperative Development Corporation (NCDC) has sanctioned over ₹10,000 crore to strengthen 56 cooperative sugar mills.
- Revised Funding: The NCDC now covers 90% of project costs (previously 70%) for setting up ethanol plants, requiring mills to contribute only 10%.
- Reduced Interest: Floating interest rates for term loans have been reduced to 8.50% to ease the financial burden.
- A new Modified Ethanol Interest Subvention Scheme allows cooperative mills to convert existing plants into multi-feedstock units using maize and damaged grains, enabling year-round operation.
- Procurement Priority: Oil Marketing Companies (OMCs) give Priority-1 to cooperative sugar mills in ethanol purchase cycles.
- Income Tax Reform: Mills are now exempt from additional income tax on "excess" payments made to farmers, provided they are within the Fair and Remunerative Price (FRP) or State Advised Price (SAP).
- GST Reduction: GST on molasses has been slashed from 28% to 5%, significantly improving liquidity for distilleries and mills.
- The government formulated the Sugar (Control) Order, 2025, to modernize regulations and include by-products like ethanol and bagasse under its framework for better oversight.
- FRP Hike: The FRP for the 2025–26 season was increased to ₹355/quintal (based on a 10.25% recovery rate) to support farmer income.
