Re-engineering India’s Agricultural Landscape

Introduction

Indian agriculture, worth nearly $600 billion, provides livelihoods to about 45% of the country’s workforce while contributing roughly 15–18% to India’s Gross Value Added (GVA). This shows how deeply important the sector is for the country’s economy and society. However, even though India is one of the world’s largest producers of foodgrains, milk, fruits, and vegetables, it accounts for only about 2.5–3% of the $8 trillion global agri-food trade. One major reason is that value addition in agriculture remains low, at around 10%. As a result, a large share of agricultural produce is sold as raw commodities instead of being processed and exported as branded products. This clear gap between India’s strong production capacity and the limited income earned from markets highlights the urgent need to transform agriculture into a modern, market-linked, and value-chain driven engine of growth.

What are the Current Developments Fueling Indian Agricultural Growth ? 

• Digital Public Infrastructure (AgriStack & Bharat-VISTAAR):
  • Building a sovereign Digital Public Infrastructure for agriculture, such as AgriStack, helps solve long-standing problems like lack of reliable farm data and fragmented land records. By bringing together farmer identities and farm-plot registries, the government can move from reactive policymaking to more precise and proactive governance. This large-scale digitisation reduces leakages in subsidy delivery and helps connect farmers to markets in real time.
    The Union Budget 2026–27 introduced Bharat-VISTAAR, a multilingual AI platform that integrates AgriStack with advisories from ICAR. As of February 2026, AgriStack has created more than 8.48 crore Farmer IDs across 14 states and mapped 28.5 crore land plots through the Digital Crop Survey.
• PM Dhan-Dhaanya Krishi Yojana:
  • This scheme shifts the focus from uniform subsidies to targeted, location-specific interventions to address regional disparities in agricultural productivity. It brings together existing decentralized schemes and directs them toward the specific needs of low-yield districts through tailored technical and agronomic support. This region-focused strategy promotes ecological resilience, crop diversification, and improved credit access in historically underdeveloped agricultural regions.
    Launched in late 2025 with an overall outlay of ₹24,000 crore, the scheme also connects districts with technical universities for support. It targets 100 low-productivity districts across India and aims to improve the livelihoods of around 1.7 crore marginalized farmers.
• Mission for Aatmanirbharta in Pulses and Oilseeds:
  • Achieving self-reliance in pulses and oilseeds is important for reducing India’s dependence on volatile global markets and strengthening food security. By encouraging farmers to cultivate pulses—many of which are nitrogen-fixing crops—the government aims to reduce the trade deficit while naturally improving soil fertility. The initiative also strengthens the value chain by linking improved seeds and cultivation support with assured procurement.
    The government launched the Mission for Aatmanirbharta in Pulses with a financial outlay of ₹11,440 crore to reduce import dependence. Central agencies have guaranteed unrestricted procurement of tur, urad, and masoor, while parallel strategies are being implemented to increase production of five major oilseeds.
• Post-Harvest Agriculture Infrastructure Fund (AIF):
  • The Agriculture Infrastructure Fund focuses on solving the long-standing issue of post-harvest losses by investing in storage, logistics, and processing infrastructure at the farm-gate level. By expanding local storage and processing facilities, farmers and cooperatives gain the ability to store produce and sell it when market prices are favorable instead of being forced into distress sales. This approach helps farmers move from being only cultivators to becoming agripreneurs, allowing more value to remain within rural economies.
    The AIF continues to play a major role up to the 2026 fiscal year, offering a 3% interest subvention and strong credit guarantees for medium-term loans. By January 2026, the fund had sanctioned ₹80,224 crore across 1,50,431 projects, generating a total agricultural investment of ₹1,27,508 crore.
• AI Integration and Precision Farming Technologies:
  • The use of artificial intelligence and advanced data tools is helping transform traditional farming into a more efficient and climate-responsive system. Technologies such as predictive analytics, satellite data, and drones enable farmers to optimize water, fertilizer, and pesticide use at a very local level, reducing both costs and environmental impact. These tools also help bridge the digital gap by delivering customized agricultural advice to farmers in local languages.
    The government has launched the Krishi Decision Support System and the voice-based AI chatbot Kisan e-Mitra, which answers thousands of farmer queries every day. The chatbot supports 11 regional languages and provides guidance on schemes such as PM-KISAN. By December 2025, it was handling over 8,000 queries daily and had responded to more than 93–95 lakh queries overall. At the same time, the Namo Drone Didi scheme, with an outlay of ₹1,261 crore, is providing 15,000 drones to women self-help groups, while AI-based pest surveillance systems monitor 65 different crops.
• Climate-Resilient Crop Insurance:
  • Strengthening crop insurance systems helps protect farmers from the increasing frequency of climate-related shocks such as droughts, floods, and extreme weather. By integrating technology into crop-loss assessment, the government can process claims faster and ensure transparent compensation for affected farmers. This financial safety net allows farmers to continue cultivation even after major weather-related losses.
    The system uses technologies such as YES-TECH (Yield Estimation System using Technology) and WINDS (Weather Information and Network Data Systems) to speed up claim assessment and settlement. With a ₹69,515 crore multi-year allocation, the system helped transfer over ₹14,000 crore to more than 90 lakh farmers in Maharashtra alone during Kharif 2025. In addition, a Fund for Innovation and Technology (FIAT) with a corpus of ₹824.77 crore has been created to further improve transparency and speed in insurance settlements.
• Decentralized Cooperative Storage Integration:
  • Strengthening Primary Agricultural Credit Societies (PACS) as multipurpose rural institutions can revive the cooperative foundation of India’s agricultural economy. By building modern storage facilities within village-level cooperatives, farmers can store produce locally and reduce dependence on middlemen and fragmented supply chains. This integration of credit access with physical storage infrastructure improves farmers’ bargaining power and market participation.
    To implement this vision, the government launched a pilot project to build decentralized warehouses managed by digitally modernized PACS units. In the early stages of the program, 165 PACS achieved financial closure, leading to the construction of 70,000 metric tonnes of local storage capacity.
• High-Value Horticulture and Export Diversification:
  • Encouraging high-value horticulture crops such as fruits, vegetables, and specialty products helps shift agriculture toward higher income and export-oriented opportunities. Creating dedicated commodity boards and production clusters supports the entire supply chain—from research and improved seeds to branding and global market access. This diversification also reduces the risks of monoculture farming while tapping into the growing global demand for health and wellness products.
    The Union Budget 2025–26 proposed the establishment of a Makhana Board in Bihar with an allocation of ₹100 crore, along with rejuvenation programs for crops such as cashew and cocoa in coastal regions. In addition, the Comprehensive Programme for Vegetables and Fruits aims to build large production clusters that connect farmers directly with expanding urban markets.

What are the Key Issues in the Indian Agricultural Sector? 

• Climate Volatility & Yield Stagnation:
  • The rising frequency of extreme weather events is disrupting traditional farming cycles and increasing agrarian distress. Irregular monsoons, sudden floods, and prolonged heatwaves are directly affecting crop yields, leaving many small and marginal farmers struggling with financial difficulties. These climate shocks often force policymakers to rely on short-term responses instead of building long-term resilience in agriculture.
    In 2025, India experienced extreme weather conditions on 331 out of 334 days, damaging around 17.4 million hectares of crop area across the country. As a result, Maharashtra’s tur (pigeon pea) production for the 2025–26 season declined by nearly 40% due to severe waterlogging and flooding.
• Land Fragmentation & Uneconomic Scale:
  • Population growth and inheritance practices have continuously divided agricultural land into smaller plots over generations. This fragmentation reduces economies of scale and makes it difficult for farmers to use large farm machinery or invest in modern technologies. As a result, many farmers operate at a very small scale where costs remain high and productivity stays low.
    According to 2025 estimates, the average landholding size in India has fallen to about 1.08 hectares, and nearly 86% of farmers are classified as small or marginal farmers.
• Distorted Input Subsidies & Soil Fatigue:
  • India’s fertilizer subsidy system has been heavily tilted toward urea, which has encouraged the excessive use of nitrogen-based fertilizers. Over time, this imbalance has caused serious environmental problems such as declining soil health, groundwater contamination, and reduced crop productivity. Such policy distortions also discourage the adoption of balanced nutrient management and sustainable farming practices.
    The Economic Survey 2025–26 highlighted that India’s N:P:K (Nitrogen, Phosphorus, Potassium) consumption ratio stands at 10.9:4.1:1, far higher than the agronomically recommended 4:2:1 ratio. At the same time, the large fiscal cost of fertilizer subsidies reduces the funds available for agricultural research, development, and rural infrastructure.
• Water Stress & Groundwater Mining:
  • Free or highly subsidized electricity for agriculture has encouraged excessive groundwater pumping, leading to unsustainable extraction of water resources. This has created serious water stress in several agricultural regions, particularly in northern states that form India’s grain-producing belt. The growing cultivation of water-intensive crops in semi-arid regions has further worsened the water–energy imbalance and increased the risk of desertification.
    Although agriculture consumes nearly 80% of India’s freshwater resources, micro-irrigation systems such as drip and sprinkler irrigation cover only about 83.45 lakh hectares. Meanwhile, tubewells account for nearly 49% of the net irrigated area, accelerating groundwater depletion in states such as Punjab and Haryana.
• Asymmetric Crop Procurement & Diversification Failure:
  • India’s Minimum Support Price (MSP) system and government procurement are heavily concentrated on crops such as wheat and paddy. This policy bias discourages farmers from shifting toward other crops like pulses, oilseeds, and millets, which are more climate-resilient and often more nutritious. As a result, the country faces oversupply in cereals while remaining dependent on imports for other essential agricultural products.
    Despite large cereal stocks, India imported more than 16 million tonnes of edible oils worth around ₹1.61 lakh crore during the 2024–25 marketing year. Although MSP increases were announced for 22 crops in 2025–26, procurement of oilseeds and other crops remained limited, exposing farmers to unstable market prices.
• Technological Divide & Agri-Tech Bottlenecks:
  • Advanced technologies such as precision agriculture, artificial intelligence, and drones have the potential to transform farming productivity. However, their adoption remains limited due to the rural digital divide, high costs, fragmented data systems, and low digital literacy among farmers. As a result, large agribusinesses benefit from technological advancements while many small farmers continue to rely on traditional methods.
    Although platforms like Bharat-VISTAAR and YES-TECH were introduced in 2025 to integrate satellite-based crop monitoring and advisory services, technology adoption among smallholders remains moderate. In addition, the lack of strong hyper-local weather forecasting systems limits the effectiveness of early warning systems for pests and climate-related risks.
• Supply Chain Inefficiencies & Post-Harvest Hemorrhage:
  • Weak storage, transportation, and cold-chain infrastructure continue to affect India’s agricultural supply chain. Many perishable products lose quality or spoil before reaching markets due to inadequate facilities. Along with complex market structures and the presence of multiple intermediaries in Agricultural Produce Market Committees (APMCs), these issues reduce the income farmers receive for their produce.
    Recent estimates show that India loses about ₹92,651 crore annually due to post-harvest losses. For perishable items such as fruits and vegetables, losses are estimated at 20% to 30%, which significantly reduces farmers’ earnings and contributes to higher food prices for consumers.
• Credit Asymmetry & Endemic Indebtedness:
  • Access to institutional credit in agriculture remains uneven. Farmers who own land often receive bank loans, while tenant farmers and sharecroppers frequently remain excluded from formal financial systems. This forces many small farmers to rely on informal moneylenders who charge extremely high interest rates, leading to long-term debt problems.
    Although the Union Budget 2025–26 allocated ₹22,600 crore for the Modified Interest Subvention Scheme (MISS) to support agricultural credit, reaching the most vulnerable farmers remains a challenge. At the same time, reductions in crop insurance allocations under PMFBY in revised estimates increase the financial risks faced by small farmers during climate-related disasters.

What Measures are Needed to Make Indian Agriculture More Profitable ? 

• Transitioning to High-Value Bio-Economic Crops:
  • In the present agricultural landscape, improving farm profitability requires shifting from low-margin staple crops toward high-value plantation and commercial crops such as cocoa, sandalwood, and medicinal plants. By aligning with the BioE3 framework (Economy, Environment, and Employment), farmers can move beyond basic food production and supply raw materials to fast-growing sectors like nutraceuticals and bio-based industries.
  • This diversification helps farmers reduce dependence on volatile cereal prices while tapping into the expanding global demand for organic extracts, herbal products, and natural fibres. Such a transition ensures that each acre of farmland generates significantly higher income compared to traditional paddy–wheat farming systems.
• Institutionalizing “AgriStack” for Precision Financing:
  • Establishing a unified Digital Public Infrastructure (DPI) through the AgriStack farmer registry can help bridge long-standing gaps between agricultural research and field-level implementation, as well as between farmers and formal credit systems. By combining digitized land records with satellite data and ICAR research inputs, financial institutions can design more accurate credit products and parametric insurance schemes with lower risks.
  • This system reduces farmers’ dependence on informal moneylenders and improves the efficiency of subsidy delivery through Direct Benefit Transfer (DBT). As a result, farmers gain better access to capital and can invest in modern technologies that improve productivity without falling into heavy debt.
• Scaling Decentralized “First-Mile” Solar Infrastructure:
  • To reduce post-harvest losses and increase farmers’ earnings, India needs to invest in decentralized cold-chain and storage infrastructure powered by renewable energy at the village level. Solar-powered cold storage units, micro-warehouses, and small processing facilities allow farmers to store their produce and sell it later instead of being forced to sell immediately at low prices during harvest seasons.
  • This type of “first-mile” infrastructure converts highly perishable produce into storable assets and increases farmers’ bargaining power in the market. By bringing initial processing activities such as sorting, grading, and drying closer to the farm gate, a larger share of the final market value can remain within rural communities.
• Leveraging AI-Enabled “Bharat-VISTAAR” for Advisory:
  • The launch of the Bharat-VISTAAR platform in 2026 represents a shift toward AI-based agricultural advisory services tailored to local conditions and delivered in regional languages. Using technologies such as IoT sensors and remote sensing, the system creates a digital representation of the farm and provides precise recommendations for irrigation, nutrient use, and pest control.
  • By optimizing fertilizer usage and predicting pest outbreaks in advance, farmers can avoid unnecessary input use and reduce cultivation costs by nearly 20%. This scientific, data-driven approach replaces traditional guesswork and ensures that productivity improvements are not offset by rising input expenses.
• Strengthening FPO-Led Direct Market Intermediation:
  • Farmer Producer Organizations (FPOs) should evolve from simple farmer groups into strong market institutions that directly connect farmers with buyers. Through digital marketplaces and platforms such as SHE-Marts, FPOs can bypass traditional intermediaries in Agricultural Produce Market Committees (APMCs) and negotiate directly with exporters, large retailers, and bulk buyers.
  • This collective approach enables small farmers to benefit from economies of scale in procurement, storage, and transportation—advantages that individual farmers usually cannot access. Stronger linkages between FPOs and the food processing sector can also help farmers capture greater value addition from their produce.
• Mainstreaming Climate-Resilient “Genome-Edited” Seeds:
  • With increasing climate variability becoming a regular challenge, adopting climate-resilient crop varieties is essential for maintaining productivity. Advances in biotechnology, such as CRISPR and genome editing, allow the development of crop varieties that can withstand heat stress, flooding, and soil salinity.
  • These improved seed varieties help stabilize crop yields even during irregular monsoon conditions, protecting farmers from severe crop losses. Expanding seed distribution through specialized “Seed Hubs” can ensure that these scientific innovations reach farmers across even the smallest landholdings.
• Promoting “Namo Drone” Services for Input Efficiency:
  • The introduction of Drone-as-a-Service (DaaS), especially through the Namo Drone Didi initiative, can significantly improve efficiency in farm operations. Drones equipped with advanced sensors can carry out precise spraying of fertilizers and pesticides much faster than manual labor while reducing chemical usage by nearly 30%.
  • This technology lowers cultivation costs and addresses the shortage of agricultural labor during peak seasons. In addition, the data collected by drones can serve as digital proof of crop conditions, helping speed up crop insurance claim processing and improving transparency in yield assessments.
• Integrating Livestock and Fisheries as Primary Growth Engines:
  • Since allied sectors such as livestock and fisheries are growing faster than crop cultivation, farmers can improve their income stability by integrating these activities into their farming systems. Livestock rearing, dairy farming, and aquaculture provide regular income streams and reduce financial risks when crop yields fluctuate.
  • Government initiatives such as the Revised National Programme for Dairy Development and credit support for fisheries value chains encourage farmers to diversify their livelihoods. Treating the farm as an integrated system—where crop residues feed livestock and animal waste supports crop production—creates a circular model that increases overall farm productivity and profitability.

Conclusion

To move from a “green revolution” to a “green-gold revolution,” India needs to close the gap between what farmers produce at the farm level and the value that can be realized in domestic and global markets. While the country has achieved strong production capacity, the real challenge lies in improving value addition, processing, and market integration so that farmers earn better returns from their produce. Integrating Digital Public Infrastructure such as AgriStack with climate-resilient biotechnology and decentralized solar-based logistics systems can help transform agriculture from a basic subsistence activity into a modern, high-value agri-business sector. These tools can improve access to data, credit, storage, and markets while also strengthening climate resilience. In the long run, the profitability and sustainability of Indian agriculture will depend on empowering small farmers through collective institutions, better bargaining power, data-driven precision farming, and a diversified bio-economy that uses resources efficiently and recognizes the value of every drop of water and every inch of soil.