Maha cabinet clears ₹738.51cr interest subsidy for co-op sugar mills

The subsidy will primarily support mills in clearing their Fair and Remunerative Price (FRP) dues for the 2025-26 crushing season

Mumbai: The Maharashtra Cabinet on Tuesday approved an estimated ₹738.51 crore interest subsidy for soft loans to cooperative sugar mills, aimed primarily at helping them clear pending Fair and Remunerative Price (FRP) dues to sugarcane farmers for the 2025-26 crushing season and meet preparatory expenses for the upcoming 2026-27 season.

Maha cabinet clears ₹738.51cr interest subsidy for co-op sugar mills

The subsidy will primarily support mills in clearing their Fair and Remunerative Price (FRP) dues for the 2025-26 crushing season. Mills that have no outstanding FRP payments can use the loans for preparatory work ahead of the 2026-27 season.

As many as 102 cooperative sugar mills crushed 527.51 lakh metric tonnes of sugarcane during the 2025-26 season. Several mills faced financial difficulties, leading the government to extend financial support to help them meet their payment obligations to farmers and prepare for the coming season.

The state had introduced similar soft-loan schemes in 2015 and 2019, offering interest subsidies on loans obtained by sugar mills from financial institutions. The latest scheme follows the same broad model.

Under the new scheme, loans sanctioned and disbursed by banks up to October 31, 2026, will qualify for the subsidy. The loan amount must primarily be used to pay pending FRP dues, while mills without outstanding dues can use the funds for pre-season preparations. The repayment period will be seven years starting October 1, 2026, and the interest subsidy will be available for the same period. The government will bear interest at 10% per annum or the actual bank interest rate, whichever is lower.

Sugar mills that fail to repay their installments on time will be removed from the scheme and will lose further interest benefits. They will also have to submit a loan utilisation certificate by July 2027. Failure to submit the certificate will make them ineligible for the subsidy.

The move is aimed at easing the financial pressure on cooperative sugar mills while ensuring that farmers do not face prolonged delays in receiving their mandated FRP payments.