A five-member panel, headed by the financial commissioner, will be constituted to finalise the joint venture.
According to officials, the arrangement with the private player will not allow transfer of assets of the two federations.
The two milk plants, one each at Jammu and Srinagar, were set up in the 1960s. In 1982-83, they were leased to two milk federations, created by the government on the recommendation of the National Dairy Development Board.
The federations could not compete with the private sector and started incurring huge losses.
According to sources, the Jammu Milk Federation has accumulated liabilities of Rs 1.7 crore. The Srinagar Milk Federation has accumulated liabilities of Rs 2.2 crore.
