The Maharashtra government has approved a soft loan scheme for cooperative sugar mills, aimed at helping mills clear outstanding Fair and Remunerative Price (FRP) payments to sugarcane farmers for the 2025-26 crushing season and prepare for the upcoming 2026-27 season. The government has also approved an estimated ₹738.51 crore in interest subsidy for the scheme over the next seven years.
During the 2025-26 crushing season, 102 cooperative sugar mills in Maharashtra crushed 527.51 lakh metric tonnes of sugarcane. However, considering the financial position of several mills and the need to ensure timely payment of FRP to farmers, the state government decided to provide access to additional funds through the soft loan scheme. The scheme is based on similar soft loan programmes introduced in 2015 and 2019, under which interest subsidies were provided on loans extended to sugar mills by financial institutions. 
Under the latest scheme, loans sanctioned and disbursed by banks up to October 31, 2026, will be eligible for interest subsidy. Sugar mills will be required to use the loan primarily for clearing their outstanding FRP liabilities to sugarcane farmers. Mills that have no pending FRP payments will be allowed to use the loan funds for preparations for the 2026-27 crushing season.
The Maharashtra government has approved an interest subsidy of approximately ₹738.51 crore for seven years. The subsidy will be provided at the lower of 10% per annum or the actual interest rate charged by the lending bank. The loan repayment period will begin from October 1, 2026, and extend over the following seven years, with the interest subsidy applicable during the same period.
The scheme also includes conditions to ensure that beneficiary mills repay their loans on time. Sugar mills that fail to make instalment payments as scheduled will immediately become ineligible for the scheme and will not receive interest relief for the subsequent period. Beneficiary mills will also have to submit a certificate confirming proper utilisation of the loan funds by July 2027. Failure to submit the required utilisation certificate will make the concerned sugar mill ineligible for the interest subsidy.
The soft loan and interest subsidy scheme is expected to provide financial support to cooperative sugar mills while facilitating the settlement of pending FRP payments and preparations for the next crushing season. The move is particularly significant for sugarcane farmers, as timely payment of FRP remains a key issue at the beginning of each crushing cycle.
