Gujarat approves sugarcane pricing dispute resolution, unlocks Rs 1,500 crore relief for cooperatives and farmers
Gujarat approved sugarcane pricing decisions of cooperative sugar mills for 2007-08 to 2014-15, unlocking nearly ₹1,500 crore in financial relief. The move benefits over two lakh farmers, reduces tax disputes on payments above FRP, and strengthens the state’s cooperative sugar sector sustainability.
In a major boost to Gujarat’s cooperative sugar sector, the state government has approved sugarcane pricing decisions taken by cooperative sugar mills between 2007-08 and 2014-15, paving the way for financial relief of around Rs 1,500 crore and benefiting more than two lakh sugarcane farmers.
Announcing the decision, Jitubhai Vaghani described the move as a significant step towards strengthening the cooperative sector and resolving a long-standing financial issue affecting sugar cooperatives across the state, The Blunt Times reported.
The dispute originated from assessments by the Income Tax Department, which treated payments made by Gujarat’s cooperative sugar mills above the Fair and Remunerative Price (FRP) as taxable profits. As a result, several sugar cooperatives received substantial tax demand notices, creating a potential financial liability estimated at nearly Rs 1,500 crore.
According to Vaghani, Gujarat’s cooperative sugar mills have historically provided higher returns to farmers by generating additional income from value-added products such as molasses, ethanol and co-generation power. These diversified revenue streams enabled cooperatives to pay sugarcane growers more than the statutory minimum price.
The resolution follows policy reforms introduced after the creation of the Ministry of Cooperation. Amendments to the Income Tax Act in 2023, promoted by the ministry under the leadership of Amit Shah, provided legal recognition to state-approved sugarcane pricing mechanisms for taxation purposes.
Subsequently, Bhupendra Patel constituted a high-level committee to review the matter. Based on the committee’s recommendations, the Gujarat government formally approved the sugarcane pricing structure applicable during the disputed period.
State officials said the decision will improve the financial position of cooperative sugar mills, reduce legal and tax-related uncertainties and support timely payments to farmers.
The government believes the measure will strengthen Gujarat’s cooperative economy, enhance the sustainability of sugar cooperatives and provide greater income security to sugarcane growers across the state.
Officials added that the move reflects the government’s continued commitment to protecting farmer interests while reinforcing the cooperative model that plays a key role in Gujarat’s rural economy.
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Source : ChiniMandi
