Gandhinagar: The Gujarat government, under the leadership of Chief Minister Bhupendra Patel, has taken a major pro-farmer decision by officially approving sugarcane prices paid by sugar cooperatives between 2007-08 and 2014-15. The move is expected to provide a financial boost of around ₹1500 crore to sugar cooperative societies and directly benefit more than two lakh farmers in the state.
Relief for Sugar Cooperatives After Years of Tax Dispute
According to Agriculture and Cooperation Minister Jitubhai Vaghani, the decision resolves a long-standing issue involving income tax disputes faced by sugar cooperatives. The Income Tax Department had earlier treated payments above the Fair and Remunerative Price (FRP) as profit, issuing tax demand notices to several cooperative sugar mills.
This created a financial burden of nearly ₹1500 crore for cooperatives linked to the 2007-08 to 2014-15 period.
Government Recognizes Sugarcane Prices Paid to Farmers
The state government has now formally approved the sugarcane prices paid to farmers during the said period. This recognition ensures that payments made by sugar cooperatives will be treated as legitimate farmer payments rather than taxable profit.
Officials said the decision strengthens the cooperative sugar sector and ensures long-term financial stability for sugar mills operating in Gujarat.
Over 2 Lakh Farmers to Benefit Directly
The decision is expected to benefit more than two lakh sugarcane farmers across Gujarat. The state’s cooperative sugar mills have been playing a major role in directly transferring payments to farmers, contributing to their financial empowerment.
The government highlighted that Gujarat farmers have traditionally received better sugarcane prices compared to many other states, due to additional income generated from by-products like molasses, ethanol, and co-generation power.
Role of Cooperative Reforms and Central Government Support
The resolution of this issue follows major reforms introduced at the national level after the creation of a separate Ministry of Cooperation under the Government of India. The 2023 amendments to income tax provisions allowed state-approved sugarcane pricing to be recognized for tax purposes. Following these reforms, the Gujarat government formed a high-level committee to examine the issue and implement appropriate recommendations at the state level.
Strengthening India’s Cooperative Sugar Sector
The state government stated that this decision will further strengthen Gujarat’s cooperative sector and support its long-standing sugar industry ecosystem. Officials emphasized that the move will ensure smoother financial operations for sugar mills and greater economic security for farmers. The government reaffirmed its commitment to protecting the interests of farmers and cooperatives, calling the decision a milestone in cooperative sector reforms.
