Archive · 3 Sep 2026
Maharashtra Plans Soft Loans and By-Product Policy for Sugar Mills
Maharashtra wants to lend money cheaply to cooperative sugar mills.
The loans could total about Rs 2,000 crore and be repaid over seven years.
The state government would pay about Rs 100 crore each year to reduce the interest cost.
Mills could use the money to pay farmers who are still owed about Rs 200 crore.
Farmers are normally supposed to receive their cane payments within 14 days.
The government also wants mills to make more than just sugar.
They could produce ethanol, electricity, gas, hydrogen and aviation fuel from sugar-industry materials.
Supporters say this could make mills stronger, while water use and crop choices remain subjects of regional debate.
The Maharashtra government plans a roughly Rs 2,000 crore soft-loan corpus for eligible cooperative sugar mills.
Loans would have a seven-year repayment period, with the state covering about Rs 100 crore in annual interest costs.
The scheme aims to help mills pay approximately Rs 200 crore in outstanding Fair and Remunerative Price dues to sugarcane farmers.
Deputy Chief Minister Sunetra Pawar ordered officials to submit the proposal to the State Cabinet and develop a separate by-product policy.
The proposed policy would promote ethanol, solar power, co-generation, Compressed Bio-Gas, Green Hydrogen and Sustainable Aviation Fuel production.
- Who
- The Maharashtra government, Deputy Chief Minister Sunetra Pawar, cooperative sugar mills and sugarcane farmers.
- What
- The government plans a soft-loan scheme and a separate policy to expand sugar-mill by-products.
- When
- The proposal was directed for immediate submission after a high-level review meeting held on Tuesday; the article does not specify the date.
- Where
- Maharashtra, with the review meeting held in Mumbai.
- Why
- To help financially distressed mills clear farmer payment arrears, prepare for the next crushing season and reduce dependence on raw sugar sales.
Financial Support and Diversification
Resource and Market Concerns
Soft loans for mills
Financial Support and Diversification
The government and cooperative sugar-mill sources support low-interest loans as a way to address working-capital shortages, clear farmer arrears and maintain operations.
Resource and Market Concerns
The article notes that the proposed support involves public interest costs and intervention in an industry affected by domestic sugar-price volatility, though it does not cite a specific opponent of the scheme.
Expansion of sugarcane-based production
Financial Support and Diversification
The government says by-product industries such as ethanol, renewable power, Compressed Bio-Gas, Green Hydrogen and Sustainable Aviation Fuel can create revenue and reduce dependence on raw sugar.
Resource and Market Concerns
The article reports regional debates because sugarcane uses over 60-70% of Maharashtra's irrigation water despite covering roughly 4% of cultivated land, prompting discussion of crop diversification and drip irrigation.
- Proposed loan corpus
- Approximately Rs 2,000 crore
- Repayment period
- Seven years
- Annual state interest burden
- Roughly Rs 100 crore
- Reported farmer arrears
- About Rs 200 crore in Fair and Remunerative Price dues
- Loan distribution
- Through District Central Cooperative Banks and the Maharashtra State Cooperative Bank
- Payment requirement
- The Fair and Remunerative Price framework requires payment within 14 days of cane delivery
- Planned by-products
- Solar power, co-generation electricity, 1G and 2G ethanol, Compressed Bio-Gas, Green Hydrogen and Sustainable Aviation Fuel