The Maharashtra government has cleared a policy that opens the door for private investment to help revive struggling cooperative sugar factories across the state, Business Standard reported.
Under the new framework, cooperative mills can set up projects to process sugarcane byproducts through private partners under the build-operate-transfer (BOT) and build-own-operate-transfer (BOOT) models. These projects will use byproducts such as bagasse, molasses and press mud to establish ventures including co-generation power plants, distilleries, ethanol units, biogas and compressed biogas plants, hydrogen projects, sustainable aviation fuel units, carbon dioxide recovery facilities, bioplastics, organic chemicals and soil conditioners.
The decision follows an order issued on February 26 by the Cooperation, Marketing and Textiles Department. The order lays down eligibility criteria, approval procedures and safeguards for projects to be developed with private participation. The government has stated that the move will not increase the financial burden on cooperative mills.
Maharashtra, one of the country’s largest sugar-producing states, has a cooperative sugar sector that has long supported rural development. However, several mills have been facing mounting losses, negative net worth and limited borrowing capacity, making it difficult for them to invest in value-added ventures.
Under the policy, a private developer will finance and construct the project, operate it for a fixed period—generally between five and 10 years, with a maximum term of 15 years—and then transfer it to the concerned sugar factory at the end of the agreement.
A cooperative mill will be treated as financially stressed if it reports losses for three consecutive years, has a negative net worth for three years, exhausts its borrowing limit, receives an audit classification of “C” or “D” for three years, operates below 50 per cent of crushing capacity for three seasons, or has outstanding government dues. Financially stable mills are also allowed to adopt the BOT or BOOT route.
Before signing any agreement, the factory’s board must pass a resolution and obtain approval under Section 20(A) of the Maharashtra Cooperative Societies Act. A detailed project report must be prepared through a government-approved agency, covering capital costs, operational expenses, the payback period and expected returns.
Projects valued at up to ₹25 crore, including taxes, can be approved by the Sugar Commissioner, while those above ₹25 crore will require government approval. Developers will be selected through a transparent e-tender process and must deposit an interest-free security amount equivalent to one year’s lease rent. The lease rent for factory land will be fixed at the prevailing ready reckoner rate or the value determined by a government-approved valuer, whichever is higher.
The policy makes the private developer responsible for obtaining statutory approvals, environmental clearances, insurance coverage and legal compliance. Developers will also be liable for labour law compliance, employee benefits, taxes and other financial obligations during the project period. At the time of transfer, the project must be free of bank loans, unpaid wages, supplier dues and government liabilities.
In case of disputes, the agreement will provide for discussion, mediation, arbitration and, if necessary, court proceedings. Contracts must include an arbitration clause. Developers who abandon projects, violate terms or face bankruptcy may have their agreements terminated, security deposits forfeited, and could also face recovery of damages and blacklisting.
Factories will be required to submit quarterly progress reports to the government, and projects will undergo independent audits by chartered accountants. Regional Joint Directors (Sugar) will conduct periodic monitoring.
The government has directed that income from these BOT and BOOT projects be used first to clear government dues, including share capital, loans and statutory payments related to the Fair and Remunerative Price.
The policy is expected to help cooperative sugar mills diversify their income sources, improve their financial health and strengthen their capacity to clear cane payments, while drawing on private investment and expertise for new bioenergy and related projects.
