Cooperative Sector in India: Structure & Contribution

Introduction to Cooperative Sector in India

The cooperative sector in India is a cornerstone of rural development, financial inclusion, and grassroots empowerment. Rooted in historical and cultural traditions of collective action and community support, cooperatives have evolved into formal institutions that significantly influence agriculture, credit, dairy, housing, fisheries, handloom and marketing sectors across the country. Built on principles of voluntary membership, democratic governance and mutual benefit, cooperatives have historically acted as instruments of social and economic inclusion, particularly in rural and semi-urban India.

According to official data compiled by the Ministry of Cooperation, India has over 8.4 lakh registered cooperative societies, with a combined membership exceeding 32 crore people, making it one of the largest cooperative movements in the world. These societies operate across more than 30 economic and social sectors, touching nearly every district of the country. Key sectors include Dairy, Agriculture, credit and thrift, Housing etc. among others.

On 15.2.2023, the Government approved a Plan to strengthen the cooperative movement nationwide and expand its reach to the grassroots level. The Plan envisages the establishment of 2 lakh new multipurpose PACS (M-PACS), dairy and fishery cooperative societies across all Panchayats and villages in the country over a five-year period. This will be implemented through convergence of various existing Government of India schemes, including the Dairy Infrastructure Development Fund (DIDF), National Programme for Dairy Development (NPDD) and PM Matsya Sampada Yojana (PMMSY), among others, with support from the National Bank for Agricultural and Rural Development (NABARD), National Dairy Development Board (NDDB), National Fisheries Development Board (NFDB) and State Governments. Know more here about the formation of ministry of cooperation and its major initiatives.

Cooperative Principles: Cooperatives are voluntary organizations, open to all persons capable of using their services and willing to accept the responsibilities of membership, without discrimination on basis of gender, social inequality, racial, political ideologies or religious consideration. Know more about principles on which a cooperative society operates.

Institutional Structure

India’s cooperative system follows a three-tier institutional structure, though the exact design varies by sector and state.

Primary Cooperative Societies

These are grassroots-level institutions directly serving members. Examples include:

• Primary Agricultural Credit Societies (PACS)
• Dairy cooperative societies
• Fisheries and handloom cooperatives
• Housing and consumer cooperatives

District and State Federations

These cooperative organizations provide coordination, capacity-building, bulk procurement, marketing support and financial intermediation to primary societies.

National-Level Apex Institutions

At the national level, sector-specific and umbrella organisations support policy advocacy, training, research and sectoral coordination. These include institutions such as the National Cooperative Union of India (NCUI), Indian Farmers Fertiliser Cooperative Ltd, (IFFCO), National Cooperative Exports Limited (NCEL) etc. See the list of all national cooperative federations here.

To improve transparency and planning, the Government has initiated the National Cooperative Database, a comprehensive digital mapping of cooperative societies across sectors. As per official updates, data validation of over 2.6 lakh primary cooperatives—including PACS, dairy and fisheries societies—has already been completed.

Cooperative Legal Framework in India

The cooperative movement’s legal underpinning in India has been shaped by a long legislative history. The Cooperative Credit Societies Act of 1904 was the first statute enabling cooperative registration and governance. Subsequent laws expanded into marketing, handloom, multi-state societies and democratic governance structures.

In the Constitution, Article 43B directs states to promote voluntary formation, autonomous functioning, democratic control and professionalism in cooperatives. Regulatory responsibilities largely rest with state cooperative departments, while the Ministry of Cooperation (established ON 6^th July 2021) now provides strategic national oversight and policy harmonization.

Key elements of the legal framework include:

• State Cooperative Societies Acts: Each state has its own legislation governing registration, elections, audit, dispute resolution and functioning of cooperatives.
• Multi-State Cooperative Societies Act, 2002 (amended in 2023): Applicable to cooperatives operating in more than one state, providing a central regulatory framework.

The creation of the Ministry of Cooperation in 2021 marked a major institutional shift, aimed at strengthening cooperative governance, enhancing cooperative governance, improving ease of doing business for cooperatives and ensuring uniform policy support across states. You can find here the cooperative movement in India – a brief history and legal framework.

Key Sectors and Contributions

India’s cooperative movement is one of the largest in the world with around 8.4 lakh registered cooperative societies, with a combined membership exceeding 32 crore people, making it one of the largest cooperative movements in the world. These cooperatives operate across more than 30 sectors and contribute meaningfully to economic and social development by promoting inclusive growth, equitable access to services, and livelihood support. To know more about recent developments in these sector, read the major initiatives of the Ministry of Cooperation. Broad sectors in which cooperatives operate are as follows:

Credit Cooperatives

Role & Structure:

• Primary Agricultural Credit Societies (PACS), District Central Cooperative Banks (DCCBs), and State Cooperative Banks form India’s three-tier cooperative credit system.
• PACS alone number over 1 lakh societies, serving 13 crore members with agricultural credit at the grassroots.

Key Contributions:

• Cooperatives provide a significant share of rural and agricultural credit, helping farmers access seasonal loans, input financing, and working capital.
• By delivering credit where commercial banks often cannot, cooperatives strengthen financial inclusion and reduce dependence on informal lenders.

• Primary Agricultural Credit Societies (PACS) form the backbone of last-mile rural credit delivery. They provide short-term and medium-term loans, input distribution and increasingly, non-credit services. However, the newly formed Ministry of Cooperation at the national level is taking initiatives to transform PACS into multi-purpose societies.
• To diversify the economic activities of Primary Agricultural Credit Societies (PACS) and transform them into multipurpose economic entities, the Ministry has framed Model Byelaws. These byelaws allow PACS to undertake more than 25 types of business activities, including dairy and fisheries, establishment of godowns, procurement of foodgrains, fertilizers and seeds, operation of LPG/CNG/petrol/diesel distributorships, provision of short-term and long-term credit, setting up custom hiring centres, running Fair Price Shops (FPS), community irrigation projects, Common Service Centres, and other allied services.
• As per government estimates, cooperatives account for nearly one-fifth of institutional agricultural credit, particularly benefitting small and marginal farmers.

Agricultural and Allied Cooperatives

Agriculture & Marketing Cooperatives

These societies assist farmers with inputs, storage, marketing, and collective bargaining, contributing to improved productivity and farm incomes.

Dairy Cooperatives

India’s dairy cooperatives have played a defining role in making the country the world’s largest milk producer. Cooperative milk unions ensure assured procurement, transparent pricing and market access for millions of milk producers.

Significance:

• Dairy cooperatives like Amul and state federations have been instrumental in India’s White Revolution, transforming the country into the world’s largest milk producer.
• Organized dairy cooperatives contribute a significant share of milk procurement, marketing, and processing, directly benefiting millions of smallholder producers.

Economic Impact:

• The dairy sector contributes significantly in India’s rural economic prosperity by tens of millions of farmers and creating vast downstream employment in allied industries.
• Recent national initiatives like White Revolution 2.0 aim to further increase cooperative dairy procurement by up to 55%, expanding farmer reach and productivity.

Fertilizer & Input Cooperatives

Cooperatives play an important role in ensuring affordable access to fertilizers and agricultural inputs for farmers across India, enhancing productivity and stabilizing input markets.

• For example, cooperatives are estimated to distribute roughly 35% of India’s fertilizer requirements, directly supporting input availability at the grassroots.

Non-Credit Cooperatives

The Annual Report of the Ministry of Cooperation classifies a wide range of cooperatives beyond credit, including:

• Agriculture and horticulture
• Fishery cooperatives
• Housing cooperatives
• Consumer and marketing cooperatives
• Industrial and processing cooperatives
• Health, transport, tourism and basic services cooperatives

These diversified cooperatives contribute not only to employment but also to community development, infrastructure support, and rural economic resilience.

Role in Rural Development

Cooperatives remain central to India’s rural development architecture by:

• Providing affordable and accessible credit
• Supporting collective marketing and value realisation
• Generating local employment and entrepreneurship
• Enhancing women’s participation through women-led cooperatives and SHG-linked institutions

By combining economic activity with social objectives, cooperatives help reduce regional and income disparities.

Government Support

Under the guiding vision of  “Sahakar se Samriddhi” (Prosperity through Cooperation) put forth by Hon’ble Prime Minister, Shri Narendra Modi and dynamic leadership of the Union Home and Cooperation Minister Shri Amit Shah, the Government of India has undertaken several initiatives including Strengthening PACS, Financial support through NCDC, Digital initiatives, including the National Cooperative Database and standardised IT platforms, Capacity building and training etc. among several other initiatives.

Similarly State Governments are reforming their cooperative structure an organizations.

Challenges and Opportunities

The cooperative sector in India faces several challenges, such as financial constraints, governance shortcomings and regulatory hurdles. Many cooperatives suffer from inadequate capitalisation and limited access to credit, which restricts their capacity to expand and diversify operations. They also encounter difficulties in adopting modern technology and digital systems, adversely affecting their competitiveness. To address these issues and to promote transparency, accountability and good governance in cooperative institutions across both rural and urban areas, the Ministry of Cooperation has undertaken a range of initiatives since its inception.

Challenges

• Variations in governance quality across states.
• Limited professional management in some primary societies.
• Financial stress in certain cooperative sectors.
• Increasing competition from private and corporate players.

Opportunities

• Digitalisation and data-driven governance
• Value addition in dairy, fisheries and agro-processing.
• Expansion of cooperatives into new service and emerging sectors.
• Greater convergence with Government programmers with ‘Whole-of-Government’ approach.

Cooperative Data for India

As per National Cooperative Database, the number of cooperative societies and their members are as follows:

• Total registered cooperative societies in India: ~8.4 lakh
• Total combined membership: ~32 crore
• These societies operate across 30+ sectors including credit, agriculture, dairy, housing, fisheries, marketing, labour and industrial cooperatives.

This expansive presence reflects the cooperative movement’s breadth and socio-economic reach, supporting livelihoods, strengthening supply chains and fostering rural and urban community development.

Sector Wise Primary Cooperatives

Source: National Cooperative Database, Ministry of Cooperation, Govt. of India as on 27^th December, 2025

Formation of Ministry of Cooperation and its Major Initiatives

National Cooperation Policy 2025

Frequently Asked Questions (FAQs) on National Cooperation Policy 2025

Top 10 Cooperative Societies in India

Top 10 Cooperative Banks in India

Sources
Ministry of Cooperation, Government of India
National Cooperative Database
Press Information Bureau (PIB) releases
Official policy documents and parliamentary replies