Gujarat Clears Rs.1,500 Crore Relief for Sugar Cooperatives, Boost for 2 Lakh Farmers

Gandhinagar | Gujarat — In a major relief for Gujarat’s cooperative sugar sector, the State Government has approved sugarcane pricing decisions taken by sugar cooperative societies for the period between 2007–08 and 2014–15, unlocking an estimated ₹1,500 crore financial benefit for the industry and directly supporting more than two lakh farmers.

Announcing the decision, Agriculture and Cooperation Minister Jitubhai Vaghani described it as a “historic, farmer-centric reform” aimed at strengthening the cooperative framework and resolving a long-pending financial dispute.

“This decision will provide significant relief to sugar cooperative societies and ensure that farmers continue to receive fair value for their produce,” Vaghani said.

Long-standing Tax Dispute Resolved

The issue stemmed from Income Tax Department assessments that treated higher-than-FRP payments made by Gujarat’s cooperative sugar mills as taxable profit, leading to large tax demand notices against several societies. The unresolved dispute had created a potential financial burden of nearly ₹1,500 crore.

Minister Vaghani explained that Gujarat’s sugar cooperatives have consistently ensured better returns for farmers compared to many other states by leveraging income from by-products such as molasses, ethanol, and co-generation power.

“Farmers in Gujarat have always received higher prices because our cooperatives focus on value addition and multiple revenue streams,” he said.

Policy Push from Centre and State

The resolution follows key policy changes at the national level after the formation of the Ministry of Cooperation. In 2023, amendments to the Income Tax Act—driven by the Union Ministry of Cooperation under Amit Shah—introduced legal recognition of state-approved sugarcane pricing for taxation purposes.

Following this, Chief Minister Bhupendra Patel constituted a high-level committee to examine the issue. Acting on its recommendations, the Gujarat Government formally approved the pricing structure for the disputed period.

Boost for Cooperative Economy

Officials said the decision will strengthen financial stability across sugar cooperatives, ensuring smoother operations and better payments to farmers. The government reiterated its commitment to protecting the cooperative ecosystem and rural livelihoods.

“This step will further empower farmers and reinforce the foundation of Gujarat’s cooperative movement,” Vaghani added.