EPR Obligations in a Multi-Tier Co-operative Structure: Mapping Liability Across Three Levels of a Dairy Supply Chain
FileMyEPR.in | EPR Compliance Insights Series
Case Study No. 2 | Plastic Waste Management | Co-operative & Multi-Tier Structures
Abstract
This case study examines how EPR obligations under the Plastic Waste Management Rules, 2016 attach across a three-tier dairy co-operative structure. The case illustrates the supply chains where plastic packaging moves between distinct legal entities before reaching the consumer along with the end product, the question of who owns the packaging at each stage (not merely who places it into the market). The case aims to determine where the compliance obligation sits. It also examines how a district union that simultaneously markets its own products may carry dual EPR obligations. The analysis provides a category-by-category framework applicable to any multi-tier franchise, co-operative, or distribution structure.
1. Background and Regulatory Context
Under the Plastic Waste Management Rules, 2016, as amended, every Producer, Importer, and Brand Owner (collectively referred to as PIBOs) are required to register on the CPCB EPR portal and comply with annual EPR targets based on the quantum of plastic packaging they place in the market.
Rule 3(1) of the said rules define these categories distinctly as under:
A brand owner is any person who sells any commodity under a brand, whether or not that person is the manufacturer of the product or the packaging. The brand owner carries the primary EPR target obligation and consequently, the financial liability for meeting it.
A producer includes, among others, contract manufacturers. Contract manufacturers are entities that manufacture and package products on behalf of a brand owner. A contract manufacturer is required to register on the CPCB EPR portal. It is obligated to report the plastic packaging consumption. Its compliance liability, however, is limited to accurate reporting as the EPR target obligation rests with the brand owner.
A single legal entity may carry obligations in more than one category if its activities span those definitions. This principle has particular significance in multi-tier structures.
For instance, a single entity could be a brand owner who is also a contract manufacturer for another brand owner.
2. Structure of the Co-operative Model
India’s dairy co-operative model operates across three distinct organizational tiers, each with a defined role in the supply chain.
The State Union is the branding and marketing arm. It purchases plastic packaging material, supplies it to district unions on a job work basis, and markets the final product under its own brand name to consumers.
The District Unions are the processing arm. They receive plastic packaging supplied by the state union, procure raw milk from village unions, process it into milk and dairy products, fill and package those products using the supplied packaging, and sell the packaged product. They function, in effect, as contract manufacturers for the state union.
The Village Unions are the procurement arm. They collect raw milk from member farmers and supply it to district unions. No plastic packaging is involved at this stage of the supply chain.
3. The Compliance Question
When EPR registration obligations are analyzed to be applied to this structure, the questions that arise have no straightforward answers in the rules. In an arrangement where the state union owns the packaging, the district union does the physical packaging and the brand name on the product belongs to the state union who is the obligated entity?
The answer to this question requires a tier-by-tier analysis.
The State Union’s EPR Obligation
The state union purchases the plastic packaging. The packaging is then placed into the market under its brand name.
Under Rule 3(1)(b) of the Plastic Waste Management Rules, 2016 (as amended), this makes the state union a brand owner. It is required to register on the CPCB EPR portal as a Brand Owner and meet the EPR target obligation for all plastic packaging that reaches consumers under its brand name, regardless of the fact that the physical act of packaging is performed by the district unions and the state union might not always be the distributor directly placing the packaged products in the market.
The District Union’s EPR Obligation
The district union receives the packaging material owned by the state union and fills and packages the milk and dairy products. It does not own the packaging material. This makes the district union a contract manufacturer. Therefore, it is required to register under EPR as a Producer, with its compliance obligation limited to accurate reporting of plastic packaging consumption.
However, a critical nuance of the whole supply chain is that, if a district union also sells products under its own local brand name, it simultaneously becomes a brand owner in its own right. In such a case, the district union carries two separate EPR obligations: one as a contract manufacturer for the state union’s products, and one as a brand owner for its own branded products. These are distinct registrations with distinct obligations.
The Village Union’s Position
Village unions have no involvement with plastic packaging. No EPR obligation arises at the village union level.
4. Legal Analysis
The complexity in this case arises from a question the co-operative structure had never previously needed to answer: who owns the plastic packaging at each stage of its journey?
Under the Plastic Waste Management Rules, the obligation does not simply follow whoever physically places the packaging into the market. It follows the entity that holds the brand under which the packaged product is sold to the consumer, and it additionally attaches to any entity in the chain that independently owns and uses plastic packaging in its operations.
Rule 3(1) of the Plastic Waste Management Rules, 2016 (as amended) defines producers, brand owners, and importers as separate categories of obligated entities. The Rules do not provide for a single consolidated obligation across an entire co-operative structure. Each legal entity within the structure must be assessed independently against its own activities.
The consequence is that a multi-tier structure in which packaging material moves between legal entities, and even entities within the same co-operative family generates EPR obligations at each point of legal transfer and use. A district union that assumes it has no EPR obligation because the packaging “belongs to” the state union has made a compliance error. A district union that assumes the state union’s registration covers its own branded product sales has made a separate compliance error.
It is also noted that as the CPCB EPR portal and the forthcoming CEPR (Common EPR Portal) infrastructure matures, the manner in which stock transfers and purchase-and-sale transactions involving plastic packaging between co-operative tiers are recorded and reported is expected to be automated and cross-referenced.
How CEPR will treat intra-co-operative packaging transfers remains to be seen, and entities in this sector should monitor the portal’s evolving technical requirements.
5. Risk Mitigation Framework
5.1 For State Unions and National Brand Owners in Co-operative Structures
It is mandatory to register as a brand owner on the CPCB EPR portal for all plastic packaging placed into the market under the brand including packaging that is physically used by district unions or contract manufacturers.
The EPR target obligation for the total quantum of plastic packaging reaching consumers under your brand rests with you, regardless of which tier in the structure performs the physical packaging.
5.2 For District Unions and Intermediate Processing Entities
It is mandatory to get a producer (contract manufacturer) registration on the CPCB EPR portal and report plastic packaging consumption accurately. If the entity also sells products under its own brand, it is required to obtain a separate registration as a brand owner and meet the EPR target obligation for those branded products independently.
It is critical to note that the state union’s EPR registration does not cover the branded product sales of the district union’s brand. Also, the registration as a contract manufacturer merely covers reporting and nothing more.
5.3 For Compliance Teams in Co-operative Structures
Conduct a category-by-category EPR assessment for each legal entity in your structure. The assessment question is not “does our co-operative have EPR registration?” It is: “what is each entity’s independent EPR registration category, and is its obligation correctly defined?”
Map the flow of plastic packaging ownership — not just physical movement — through the structure. Where legal ownership of packaging changes hands, re-assess the EPR obligation. Incorporate EPR registration verification into the annual compliance calendar for every tier.
6. Broader Implications
The dairy co-operative structure is one of the most widespread supply chain models in India. It is also a large network of regulated and unregulated players right from farmers, village and panchayat unions to Co-operatives and state unions. However, the compliance logic examined in this case applies equally to any multi-tier franchise, distribution, or co-operative arrangement in which plastic packaging moves between and across legal entities before reaching the consumer.
FMCG franchise networks, regional bottling and packaging arrangements, and distribution structures where a national brand owner supplies packaging to regional operators all share the same structural exposure: a compliance question about who owns the packaging at each stage, with distinct EPR obligations at each level.
As enforcement matures and EPR portal data is cross-referenced with GST transaction records, gaps in multi-tier compliance structures will become progressively more visible. The time to map and address these obligations is now, while the framework is still being embedded across sectors.
7. Conclusion
In a multi-tier co-operative structure, EPR compliance cannot be assessed at the level of the structure as a whole. It must be assessed entity by entity, tier by tier, in line with the movement of the packaging and the goods, based on what each legal entity owns, uses, and sells.
The compliance question is not simply “who puts the plastic into the market?” It is “who owns the plastic at each stage of its journey?” The answer to that question determines where the obligation sits. Getting it wrong in either direction creates an audit exposure, or an overcompliance burden.
This case study has been prepared by FileMyEPR.in for educational and informational purposes. All identifying details have been anonymized. This document does not constitute legal advice. For compliance-specific guidance, contact the FileMyEPR.in advisory team.
