Agricultural Policy Monitoring and Evaluation 2025

14. India

Main findings

Support to agriculture

India has the most negative PSE of all the countries in this report, averaging -14.5% of gross farm receipts in 2022-24. Net support to producers in India has been negative throughout the last two decades, but fluctuates in level from year to year. The negative producer support implies that domestic producers have been implicitly taxed on average, as budgetary payments to farmers do not offset the price-depressing effect of complex domestic marketing regulations and trade policy measures. Virtually all gross producer transfers (whether positive or negative) come in potentially most production and trade-distorting forms.

Support to producers in 2022-24 includes budgetary transfers corresponding to 11% of gross farm receipts, positive Market Price Support (MPS) of +2.7% of gross farm receipts for commodities that are supported and negative MPS of as much as -28.2% for those that are taxed. Export restrictions were applied in 2022-24 to various types of rice, wheat, sugar, onions, and related products (e.g. wheat flour). Commodities with positive Single Commodity Transfers (SCT) – ranging between 3.9% and 24% of commodity receipts in 2022-24 – include sugar, chickpeas, other pulses, and poultry meat.

Budgetary transfers to producers are dominated by subsidies for variable input use, mainly fertilisers, electricity, and irrigation water. However, budgetary allocations to the direct income transfer programme, PM-KISAN, have been increasing since its implementation in 2018 and represent 10.6% of budgetary spending in 2022-24.

Public expenditures financing general services to the sector (General Service Support Estimate, GSSE), mainly related to investments in off-farm irrigation systems, are around half the level of subsidies for variable input use. Expenditures for GSSE increased to 4.1% of the value of agricultural production in 2022-24, from 3.2% in 2000-02.

Policies that affect farm prices provide implicit support to consumers. Food subsidies provided through the Targeted Public Distribution System, whose allocations increased substantially during the COVID-19 pandemic, also reduce costs for consumers. The consumer support estimate is 31.8% of expenditure on average across all commodities in 2022-24.

Estimated total support to the sector was about a negative 0.9% of GDP in 2022-24, compared to a positive 1% in 2000-02. Still, positive support amounted to as much as 3% of GDP in recent years, indicating significant costs to the Indian economy arising from agricultural policies.

Key recent policy changes

Over the course of 2024, India gradually removed most export restrictions on rice (bans, duties, and minimum export prices) previously introduced in 2022-23. At the end of March 2025, the last remaining export ban on broken rice was also removed. In turn, tariffs for crude palm, soybeans and sunflower oil were raised in 2024 from 0% to 20% and for refined sunflower and soybean oils from 12.5% to 32.5%.

The 2024-25 Union Budget targets increasing grain production by 50 million tonnes by 2030 (a 15% increase compared to the 2023-24 marketing year output), while also diversifying production towards horticulture, pulses, and oilseeds. The budget allocation for the subsidised credit programme Kisan Credit Card was also increased by 67%, and the budget for key dairy sector programmes increased by 16%.

In June 2024, the minimum support price (MSP) was increased from the previous marketing season for several summer-planted (kharif) crops. In October 2024, the minimum support prices for winter-planted (rabi) crops were also increased. In February 2024, the Fair and Remunerative Price for sugarcane was increased by almost 8%.

India and the European Free Trade Association (EFTA) signed a Trade and Economic Partnership Agreement (TEPA) on 10 March 2024. EFTA is removing duties on 92.2% of its tariff lines, which cover 99.6% of India’s exports; EFTA’s market access includes tariff concessions on processed agricultural products. India is removing duties on 82.7% of its tariff lines, which cover 95.3% of EFTA exports, but sectors such as dairy, soybeans and other sensitive agricultural products are excluded.

Assessment and recommendations

• India’s agriculture faces productivity and sustainability challenges. The low productivity of farmers, and particularly the prevalence of marginal and small-scale farmers with limited access to finance and technology, represent a substantial challenge. This is exacerbated by fragmented and complex supply chains involving numerous intermediaries, restrictive domestic marketing policies and border measures that have been on average reducing prices below those on international markets over most of the period reviewed. At the same time, the sustained growth in agricultural output and fertiliser use have put mounting pressures on natural resources, particularly land and water.

• Considering India’s role as a major agri-food exporter, India should leverage domestic efforts on environmental sustainability, particularly given the recent inclusion of environmental provisions in trade agreements to support the transition to more sustainable agricultural practices. For example, the inclusion of environmental provisions in the India-EFTA TEPA marks a positive step and could be replicated in future agreements to promote access and adoption of low-emission technologies, facilitate knowledge exchange and collaborative research on sustainable farming. This could also support improvements to reporting and collecting data on the environmental footprint of agricultural production across India’s diverse agricultural landscape.

• Agricultural support could be better aligned with mitigation and adaptation efforts. Gradually scaling back variable input subsidies (fertiliser, irrigation water and electricity) can lower greenhouse gas (GHG) emissions and other environmental pressures and increase flexibility to adjust production systems. Resulting savings could be reoriented to train farmers in more efficient and sustainable input use, to meet international standards for exported commodities, and to ensure extension systems can reinforce digital skills and resilience.

• Enhancing the electronic National Agricultural Market (e-NAM) set up in 2016 should remain a priority to foster efficient markets and competitive agro-food supply chains across states. In addition, the 2017 model Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act should be implemented in a more harmonised and consistent way across states and synchronised with reforms to the MSP system through coherent plans. Complementing these programmes with investments in transport infrastructure, marketing, training, and other general services to agriculture will help farmers reap the benefits in productivity and income. Budgetary allocations for rural infrastructure and digitalisation in agriculture in recent Union Budgets are positive steps in this direction.

• The large share of employment in agriculture compared to its GDP contribution reflects the persistent labour-productivity gap relative to other sectors and translates into low farm incomes. In the short-to-medium term, direct cash transfers (such as through PM-KISAN) can support the poorest farmers’ livelihoods and adjustment to new market conditions. In the longer term, policies focused on education, rural infrastructure, and financial services are needed to facilitate significant structural adjustments, including the transition of farm labour to other activities and consolidation towards farm operations sufficiently large to exploit economies of scale.

• India is a significant agro-food exporter. The Agricultural Export Policy (AEP) framework adopted in 2018 helped reduce uncertainty and transaction costs throughout supply chains by easing export restrictions on organic and processed agricultural products. However, recent export restrictions on products such as rice, wheat, sugar, onions, and related products directly affect India’s reliability as a supplier and exacerbate the persistent challenge of low farm incomes. An extension of the AEP to more agri-food products should be considered to create a stable and predictable market.

• Recent reductions in tariffs and relaxation of quantitative restrictions on selected pulses, albeit temporary, are additional positive steps towards improving food security and diversifying diets. Together with domestic marketing reforms, easing export and import restrictions would make the market more predictable and increase incentives for producers and traders to invest in supply chains. More generally, agricultural policy could be better anchored in a broad and long-term policy framework, moving towards more neutral, stable, predictable, and targeted policies.

• India made significant progress eliminating inefficiencies in the food-distribution system in the period before the COVID-19 pandemic, and these efforts should continue. The experimental replacement of physical grain distribution with direct cash transfers could be gradually expanded, including by drawing on recommendations made by the High-Level Commission on Restructuring the Food Corporation of India, which suggested focusing initially on cities with populations over 1 million, followed by grain surplus states.

Development of support to agriculture

Table 14.1. India: Estimates of support to agriculture

Million USD

	2000-02	2022-24	2022	2023	2024p
Total value of production (at farm gate)	112 282	446 597	438 678	445 937	455 175
of which: share of MPS commodities (%)	64.75	79.48	77.82	79.13	81.51
Total value of consumption (at farm gate)	109 060	417 925	399 706	427 812	426 257
Producer Support Estimate (PSE)	-2 709	-73 146	-97 587	-49 758	-72 094
Support based on commodity output	-11 243	-128 993	-157 674	-102 554	-126 751
Market price support¹	-11 243	-128 994	-157 676	-102 554	-126 751
Positive market price support	3 583	12 900	12 103	9 884	16 712
Negative market price support	-14 827	-141 893	-169 779	-112 438	-143 463
Payments based on output	0	1	2	0	0
Payments based on input use	8 519	47 917	52 333	45 090	46 328
Based on variable input use	8 519	46 625	51 808	43 690	44 378
with input constraints	0	0	0	0	0
Based on fixed capital formation	0	1 221	451	1 295	1 918
with input constraints	0	0	0	0	0
Based on on-farm services	0	71	75	105	32
with input constraints	0	0	0	0	0
Payments based on current A/An/R/I  production required	0	0	0	0	0
Based on Receipts / Income	0	0	0	0	0
Based on Area planted / Animal numbers	0	0	0	0	0
with input constraints	0	0	0	0	0
Payments based on non-current A/An/R/I  production required	0	0	0	0	0
Payments based on non-current A/An/R/I  production not required	0	7 415	7 255	7 435	7 556
With variable payment rates	0	0	0	0	0
with commodity exceptions	0	0	0	0	0
With fixed payment rates	0	7 415	7 255	7 435	7 556
with commodity exceptions	0	0	0	0	0
Payments based on non-commodity criteria	0	0	0	0	0
Based on long-term resource retirement	0	0	0	0	0
Based on a specific non-commodity output	0	0	0	0	0
Based on other non-commodity criteria	0	0	0	0	0
Miscellaneous payments	15	514	499	271	773
Percentage PSE (%)	-2.31	-14.51	-19.57	-9.98	-14.14
Producer NPC (coeff.)	0.91	0.77	0.73	0.81	0.78
Producer NAC (coeff.)	0.98	0.87	0.84	0.91	0.88
General Services Support Estimate (GSSE)	3 526	18 644	17 546	18 789	19 596
Agricultural knowledge and innovation system	402	1 388	1 269	1 419	1 475
Inspection and control	25	642	500	647	780
Development and maintenance of infrastructure	2 021	15 564	14 721	15 695	16 275
Marketing and promotion	14	151	147	151	156
Cost of public stockholding	1 044	880	892	858	890
Miscellaneous	21	18	17	19	20
Percentage GSSE (% of TSE)	70.90	.	.	-463.81	.
Consumer Support Estimate (CSE)	14 692	135 241	170 881	112 578	122 265
Transfers to producers from consumers	10 856	107 587	137 910	86 595	98 255
Other transfers from consumers	-224	-150	-309	147	-288
Transfers to consumers from taxpayers	4 222	28 966	35 248	26 918	24 731
Excess feed cost	-163	-1 161	-1 968	-1 083	-434
Percentage CSE (%)	14.12	34.63	46.89	28.08	30.45
Consumer NPC (coeff.)	0.91	0.80	0.74	0.83	0.81
Consumer NAC (coeff.)	0.88	0.74	0.68	0.78	0.77
Total Support Estimate (TSE)	5 040	-25 537	-44 793	-4 051	-27 766
Transfers from consumers	-10 632	-107 437	-137 601	-86 742	-97 968
Transfers from taxpayers	15 896	82 050	93 117	82 544	70 489
Budget revenues	-224	-150	-309	147	-288
Percentage TSE (% of GDP)	1.02	-0.70	-1.34	-0.11	-0.72
Total Budgetary Support Estimate (TBSE)	16 283	103 457	112 883	98 503	98 985
Percentage TBSE (% of GDP)	3.33	2.87	3.37	2.76	2.56
GDP deflator (2000-02 = 100)	100	410	405	411	415
Exchange rate (national currency per USD)	47.26	82.44	80.36	82.77	84.17

.. Not available

Note: p: provisional. NPC: Nominal Protection Coefficient. NAC: Nominal Assistance Coefficient. A/An/R/I: Area planted/Animal numbers/Receipts/Income. 1. Market Price Support (MPS) is net of producer levies and excess feed cost. MPS commodities for India are: wheat, maize, rice, soybean, rapeseed, groundnuts, chick pea, other pulses, potatoes, onion, tomatoes, mango, bananas, sugar, cotton, milk, bovine meat, sheep meat, poultry and eggs.

Source: OECD (2025), “Producer and Consumer Support Estimates”, OECD Agricultural policy monitoring (database), https://data-explorer.oecd.org/.

Policy landscape

Main policy instruments

Agricultural policy framework

Agriculture and food is governed via six major policy channels: 1) managed prices and marketing mechanisms for many farm products; 2) subsidised farm inputs; 3)  general services for the agricultural sector as a whole; 4) public stockholding through purchasing, storing and making certain food staples available to selected groups of the population at subsidised prices; 5) regulated border transactions through trade policy; and more recently, 6) the income support scheme PM-KISAN (OECD/ICRIER, 2018[1]; ICRIER, 2022[2]; Gulati, Kapur and Bouton, 2020[3]).

States have constitutional responsibility for many aspects of agriculture, but the central government sets national approaches to policy and provides the necessary funds to implement programmes at the state level. The central government (Union Cabinet) is responsible for some key policy areas, notably international trade policies, and for the implementation of the National Food Security Act (NFSA) of 2013.

Policies affecting domestic prices and marketing channels

Policies governing the marketing of agricultural commodities in India – for both producers and the food chain , include controls on the production, supply, distribution, and pricing of essential commodities, and state-level regulations regarding the pricing, procurement, stocking, and trading of commodities. The first point of sale of agricultural products occurs at regulated market yards (mandis) under the responsibility of Agricultural Produce Market Committees (APMC), which manage government procurement under the minimum support price (MSP) system.1

The central government establishes a set of MSPs for 23 commodities each year based on the average cost of production, considering both the actual covered cost of production and the imputed value of family labour. State governments may also provide a bonus payable over and above the MSP for some crops. National and state-level agencies operating on behalf of the Food Corporation of India (FCI) can buy wheat, rice, and coarse grains. Several other agencies can buy pulses, oilseeds, and cotton at MSPs – including through the umbrella scheme Pradhan Mantri Annadata Aay Sanrakshan Yojna (PM-AASHA), introduced in 2018, which is designed to ensure remunerative prices to farmers for their produce. Some horticulture commodities without MSP are also procured. However, procurement under the price support scheme effectively operates mainly for wheat, rice, and cotton, and only in a few states. The MSP scheme only applies when approved agencies purchase commodities, it is not a guaranteed price to the farmer if they sell to intermediaries, private traders, consumers, or non-approved agencies.

The electronic National Agricultural Market (e-NAM) set up in 2016 and a model Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act were both recommended by the central government for adoption by state governments. E-NAM is an online trading platform for agricultural commodities in India, which aims to create a network of APMC mandis. It currently integrates more than 1 000 APMC markets in 18 states and 3 Union Territories (UTs); almost 17 million farmers and 150 000 traders are registered on the e-NAM platform.2

Input subsidies and other budgetary transfers

Input support policies enable agricultural producers to obtain farm inputs at subsidised prices. Policies governing the supply of fertilisers, electricity and water are the largest of these. Other supported inputs are seeds, machinery, credit, and crop insurance. State-level loan debt waivers, compensating lending institutions for forgiving debt to farmers, have grown in importance. Aiming to improve formal credit penetration in the agricultural sector, the Reserve Bank of India (RBI) has mandated banks to allocate 40% of their adjusted net bank credit to Priority Sector Lending, of which 18% is reserved for agricultural credit. However, only 41% of small and marginal farmers can access bank credit and about 30% of agricultural loans continue to come from non-institutional sources (e.g. moneylenders), as opposed to financial institutions such as commercial banks.

Premiums for crop insurance have been cost-shared since 2000, through mechanisms including the National Agricultural Insurance Scheme, the Modified National Agricultural Insurance Scheme, the Weather Based Crop Insurance Scheme, the Coconut Palm Insurance Scheme, the National Crop Insurance Program, the Restructured Weather Based Crop Insurance Scheme, and most recently, the Pradhan Mantri Fasal Bima Yojna (PMFBY) scheme. PMFBY, introduced in 2016, provides insurance to farmers for crop losses due to monsoon fluctuations or other extreme weather events. Under PMBFY, farmers pay a very small share of the total insurance premium: 2% of the sum insured for kharif crops; 1.5% for rabi crops; and 5% for horticultural crops. The remaining premium (often 85–98%) is covered by the government, typically split equally between the central and state governments.

The PM-KISAN scheme provides an annual direct income transfer of INR 6 000 (USD 84) per farmer to all farmers with land titles. The payment does not require farmers to produce, is irrespective of the farm size, and may be used for any need.

General services policies focus on programmes for the development and maintenance of infrastructure (85% of general services support in 2022-24), particularly related to irrigation. Budgetary support is also significant for agricultural knowledge and innovation (7%) and for public stockholding (5%).

Support to consumers

Public distribution of food grains is the joint responsibility of the central and state governments. The Targeted Public Distribution System (TPDS) operates under the National Food Security Act (NFSA) in all states and UTs. Other Welfare Schemes (OWS) also operate under the NFSA. The central government allocates food grains to state governments and the FCI transports food grains from surplus states to deficit states. State governments distribute the food grain entitlements by allocating supplies within the state, identifying eligible families, issuing ration cards, and distributing food grains mainly through Fair Price Shops.

Trade policy

India’s Foreign Trade Policy is formulated and implemented by the Directorate General of Foreign Trade (DGFT) and announced every five years. It is reviewed and adjusted annually in consultation with relevant public agencies. The Basic Customs Duty (BCD), also known as the statutory rate, is agreed at the same time as the approval of the annual budget. In contrast to previous five-year Foreign Trade Policy frameworks, the latest Foreign Trade Policy 2023 – effective as of 1 April 2023 – does not include an end date.

Agricultural exports have been managed for several decades through a combination of export restrictions, including export prohibitions, licensing requirements, quotas, taxes, minimum export prices,3 and state trading requirements. How these restrictions are enforced, extended or terminated may change several times per year, according to domestic supplies and prices. The 2018 Agriculture Export Policy framework tries to address some of these issues through three main areas of action:

• Recommending that processed agricultural products and organic products are not subject to export restrictions.

• Undertaking consultations among stakeholders and ministries to identify those essential food security commodities to which export restrictions may be applied under specific market conditions.

• Reducing import barriers applied to agricultural products for processing and re-export.

Policies relating to climate change adaptation and mitigation

The National Mission for Sustainable Agriculture (NMSA), which became operational in 2014-15, aims to improve agricultural productivity while ensuring the long-term sustainability of natural resources by promoting environmentally friendly agricultural practices and site-specific approaches. NMSA emphasises sustainable development pathways through a gradual transition to green technology, energy-efficient equipment, conservation of natural resources, and integrated agriculture. It also promotes soil health management, water efficiency, the efficient use of chemicals, crop diversification, and agroforestry.

India ratified the Paris Agreement on Climate Change on 2 October 2016. India updated its Nationally Determined Contribution (NDC) in August 2022. The 2022 NDC comprises eight goals, three of which are quantitative targets to be achieved up to 2030: 1) to reduce emissions intensity relative to GDP by 45% from the 2005 level; 2) to achieve about 50% cumulative electric power installed capacity from non-fossil-fuel-based energy resources; and 3) to create an additional carbon sink of 2.5 billion to 3 billion tonnes CO_2-equivalents through forest and tree cover.

Mitigation efforts to reduce GHG emissions from agriculture are largely through production techniques that improve emissions intensity (e.g. initiatives such as horticulture land extension, increased rice intensification systems, direct-seed rice cultivation, solar pumps, micro-irrigation, neem-coated urea scheme, bio-fertilisers, balanced feedstock, and bypass protein for livestock).

Policies for trade and sustainability in agro-food markets

India has only recently started to incorporate specific provisions linked to agriculture and environmental sustainability in its trade agreements. The India-European Free Trade Association (EFTA) Trade and Economic Partnership Agreement (TEPA) (signed in March 2024) includes provisions that address environmental considerations within the agricultural sector. The agreement comprises a chapter dedicated to Trade and Sustainable Development, which emphasises the integration of environmental protection and sustainable development goals into trade practices. This chapter acknowledges the importance of environmental protection in the context of trade. It underscores the commitment of the parties to uphold environmental standards and promote sustainable agricultural practices.

Other relevant cross-border co-operation initiatives include the India-Brazil-South Africa (IBSA) Dialogue Forum. Through the IBSA Dialogue Forum, India collaborates with Brazil and South Africa to promote South-South co-operation. As regards agriculture and environmental sustainability, the Forum aims to facilitate the exchange of best practices and research collaboration.

India estimates emissions at a sectoral level, while some specific estimates are available at programme level. This includes, for instance, programmes promoting sustainable production methods in rice cultivation or programmes for avoiding crop residue burning. The Fourth Biennial Update Report to the United Nations Framework Convention on Climate Change (UNFCCC), issued in December 2024, highlights the constraints, gaps and capacity building needs for India in its GHG inventory reporting, including in the agricultural sector. The main constraints to GHG measurement and reporting in the agricultural sector are linked to:

• insufficient data on crop production and crop-wise nitrogenous fertiliser usage at sub-national level

• quantification of mitigation actions

• measurement across different agro-ecological zones

• lack of advanced monitoring technologies.

Recent policy developments

Domestic policy developments in 2024-25

Strategic framework

The 2024-25 Union Budget, released in February 2025, includes orientations in six areas: self-sufficiency and food security; sustainable production practices; digitalisation; infrastructure development; rural financial inclusion; and boosting agri-food exports.

• Self-sufficiency and food security, through increased grain production targets (50 million tonnes by 2030, which represents a 15% increase compared to the 2023/24 marketing year output) and diversification beyond staples (horticulture, pulses and oilseeds).

• Sustainable production practices, through: (i) the promotion of “natural farming”4 (target of covering 10 million farmers) and organic farming (target of establishing 10 000 bio-input resource centres to provide organic fertilisers and biopesticides); (ii) the introduction of 109 new climate-resilient crop varieties; (iii) and the strengthening of the Pradhan Mantri Fasal Bima Yojana (PMFBY) crop insurance scheme.

• Digitalisation of agriculture, through the National Digital Agriculture Mission, e-NAM market expansion, and expansion of drone usage for precision farming, soil monitoring, and pesticide spraying.

• Infrastructure development, through storage and post-harvest management (under the Prime Minister Dhan-Dhaanya Krishi Yojana scheme), irrigation and water management (expansion of the Pradhan Mantri Krishi Sinchayee Yojana scheme to improve water-use efficiency).

• Rural financial inclusion, through raising the Kisan Credit Card (KCC) loan limit by 67% benefitting 77 million farmers (KCC offers a revolving cash credit facility to farmers) and continued support for fertilisers and seed subsidies to ensure input affordability for small and marginal farmers.

• Boosting agri-food exports, through the expansion of export-oriented farm clusters to help India increase agricultural exports and the strengthening of trade agreements to promote organic and processed food exports.

Domestic market interventions

In June 2024, the minimum support price (MSP) was increased from the previous marketing season for several summer-planted (kharif) crops, including rice (by 5.4%), maize (6.5%), groundnuts (6.4%), soybeans (6.4%), pigeon peas (8%), black gram (1.5%), and cotton (7.6%). In October 2024, the GoI also increased the minimum support prices for winter-planted (rabi) crops, including wheat (by 6.6%), barley (7%), gram (3.9%), lentils (4.3%), and rapeseed (5.3%). In February 2024, the GoI increased the Fair and Remunerative Price for sugarcane by almost 8%.

In June 2024, stock limits were imposed on wheat held by retailers, wholesalers, traders and processors until 31 March 2025, to prevent hoarding of wheat and discourage price speculation. In September 2024, the government lowered these stock limits for traders/wholesalers, retailers and processors.

The 2024-25 Union Budget increased the budget for the Department of Animal Husbandry and Dairying (DAHD) by 16%. The increase in budget will be mainly allocated to the following existing programmes:

• The Rashtriya Gokul Mission programme for facilitating the improvement of animal genetic potential. The programme also facilitates the availability of high genetic germplasm and the strengthening of the extension service network across the country for artificial insemination.

• The National Program for Dairy Development, which facilitates the availability and distribution of milk quality testing infrastructure, creates market linkages for rural production, and promotes the capacity building of stakeholders.

• The Dairy Processing and Infrastructure Development Fund, which provides subsidised credit to milk cooperatives for replacing old chilling and processing plants and encourages the production of value-added products. It also extends financial support for milk transportation, laboratory equipment for research and development, product development, and marketing infrastructure (e.g. e-market systems, bulk vending systems, milk parlours, deep freezers, cold storage).

• The Supporting Dairy Cooperatives & Farmer Producer Organisations programme, which provides working capital support to dairy cooperatives and Farmer Producer Organisations.

• The National Animal Disease Control programme.

Trade policy developments in 2024-25

Measures affecting imports

In September 2024, tariffs were increased on edible oils. The tariffs for crude palm, soybeans and sunflower oil were raised from 0% to 20% and for refined sunflower and soybean oils from 12.5% to 32.5%. This effectively increased the total import duty on the oils to 27.5% and 38%, as these products are also subject to India’s Agriculture Infrastructure and Development Cess (AIDC) and Social Welfare Surcharge.5

Measures affecting exports

Following export restrictions introduced on rice in 2022 and 2023, India was faced with an increased rice harvest and growing government rice stocks in 2024. Throughout 2024, India gradually removed most export restrictions previously applied in 2022-23. At the end of March 2025, it also removed the last remaining export ban on broken rice:

• On 14 September 2024, the floor price on exports of basmati rice was removed.

• On 17 September 2024, the export tax on semi or whole milled rice other than parboiled and basmati rice (HS 1006.30.90) was removed, and the export tax was lowered from 20% to 10% for rice in husk (HS 1006.10.90), husked rice (HS 1006.20.00) and parboiled rice (HS 1006.30.10).

• On 28 September 2024, exports of non-basmati white rice (HS 1006.30.90) were removed from the prohibited list, allowing exports but maintaining this subject to a minimum export price of USD 490 per metric tonne.

• On 22 October 2024, the export tax on rice in husk, husked rice, and parboiled rice was removed.

• On 23 October 2024, the minimum export price for exports of non-basmati white rice was removed.

• On 24 March, the export ban on broken rice was removed.

In January 2025, India set an export quota for sugar until September 2025 of 1 million tonnes, due to concerns around the expected harvest. At the end of March 2025, it removed this quota for the 2024/25 marketing season.

Trade agreements

India and the European Free Trade Association (EFTA) signed a Trade and Economic Partnership Agreement (TEPA) on 10 March 2024. EFTA is removing duties on 92.2% of its tariff lines, which cover 99.6% of India’s exports; the EFTA’s market access offer covers 100% of non-agricultural products and tariff concessions on processed agricultural products. India is removing duties on 82.7% of its tariff lines, which cover 95.3% of EFTA exports, but sectors such as dairy, soybeans and other sensitive agricultural products are excluded.

Policy context

Key economic and agricultural statistics

India is the seventh largest country in the world by land area and became the most populous country worldwide in 2022. While the share of urban population continued to increase over the past decade, about two-thirds of the population still lives in rural areas. At just 0.12 ha per capita, agricultural land is very scarce.

Agriculture continues to be an important part of India’s economy. The sector accounts for 16% of GDP, but the estimated 43.5% share of employment indicates that labour productivity remains significantly lower than in the rest of the economy (Table 14.2). The productivity gap is also reflected in the evolution of farm incomes, which have increased by less than one-third that of non-agricultural incomes in recent years. Agriculture’s weight in the economy has gradually declined, mostly in favour of services, which have led economic growth over the last two decades and played a more important role in India’s economic development than in most other major emerging economies.

Indian agriculture is continuing to diversify towards livestock and away from grain crops. While grains and milk remain dominant, there has been a gradual change in the composition of production to other crops – such as sugar cane, cotton, fruit and vegetables – as well as certain meat sub-sectors. The livestock sector has seen faster and less volatile growth than the crop sector. The agricultural sector continues to be dominated by a large number of small-scale farmers, as the national average farm size has been in steady decline.

Table 14.2. India: Contextual indicators

	India		International comparison
	2000*	2023*	2000*	2023*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	2 212	14 620	5.5%	9.5%
Population (million)	1 058	1 438	24.7%	27.2%
Land area (thousand km2)	2 973	2 973	3.6%	3.6%
Agricultural area (AA) (thousand ha)	180 975	178 528	6.0%	6.1%
			All countries1
Population density (inhabitants/km2)	356	484	52	64
GDP per capita (USD in PPPs)	2 091	10 166	9 368	29 013
Trade as % of GDP	10.2	15.4	12.3	14.9
Agriculture in the economy			All countries1
Agriculture in GDP (%)	21.6	16.0	2.9	3.5
Agriculture share in employment (%)	59.6	43.5	-	-
Agro-food exports (% of total exports)	10.9	10.3	6.4	8.1
Agro-food imports (% of total imports)	5.6	5.2	5.8	7.3
Characteristics of the agricultural sector			All countries1
Crop in total agricultural production (%)	73.0	63.0	-	-
Livestock in total agricultural production (%)	27.0	37.0	-	-
Share of arable land in AA (%)	88.9	86.5	31.8	33.3

Note: *or closest available year.

1. Average of all countries covered in this report.

Sources: OECD statistical databases; International Labour Organisation (ILO); UN Comtrade; World Bank, WDI; FAO database and national data.

Real GDP growth has been fluctuating between 4% and 8% over the last two decades (except for the -5.8% drop in 2020 during the COVID-19 pandemic), highlighting remaining structural bottlenecks in areas such as labour markets or the business environment. Following the COVID-19 pandemic, growth rebounded to 9.1% in 2021, placing India again among the fastest growing G20 economies. Growth moderated, however, in 2022-24 against the backdrop of Russia’s war of aggression against Ukraine, supply chain disruptions, and rising energy and food prices. The deceleration from 8.2% real GDP growth in 2023 to 6.8% in 2024 is influenced by a sluggish manufacturing sector, dampened corporate investments, and global trade uncertainties. The relatively low unemployment figure (averaging about 5.1% in 2021-23) hides significant informal employment. Inflation witnessed a significant decline, reaching 3.8%, the lowest in nearly two decades. This drop was primarily attributed to falling prices of vegetables and protein-rich food items, which constitute a substantial portion of the Consumer Price Index basket. (Figure 14.3).

India is a consistent net agro-food exporter, with agro-food exports representing 10.3% of total exports. However, agro-food imports have until recently been growing faster than exports. Products for direct consumption – of low value, raw or semi-processed, and marketed in bulk – dominate agro-food exports, representing 64% of the total in 2023. Processed products for further processing by domestic industry are the main import category, accounting for 62% of total agro-food imports (Figure 14.4).

Agricultural output growth in India averaged 3.5% in 2013-22, well above the world average (Figure 14.5). This has been driven mainly by a significant increase in total factor productivity (TFP) which grew at 1.7% per year, backed by technological progress in the form of improved seeds and better infrastructure (including irrigation coverage, road density, and electricity supply).

However, the sustained growth in agricultural output and fertiliser use have put mounting pressures on natural resources, particularly land and water. This is reflected in the nutrient surplus intensities at the national level, which have grown over time and are much higher than the average for OECD countries (Table 14.3). Eighty-seven per cent of total water abstractions are by the agricultural sector. The share of agriculture in total GHG emissions is also higher than the OECD average, partly due to the weight of the agricultural sector in the Indian economy. Livestock rearing is the main source of GHGs.

Table 14.3. India: Productivity and environmental indicators

	India		International comparison
	1991-2000	2013-2022	1991-2000	2013-2022
			World
TFP annual growth rate (%)	0.4%	1.7%	1.7%	0.8%
			OECD average
Environmental indicators	2000*	2023*	2000*	2023*
Nitrogen balance, kg/ha	90.7	136.4	32.0	29.7
Phosphorus balance, kg/ha	20.8	27.5	3.3	2.5
Agriculture share of total energy use (%)	5.3	4.8	1.7	2.0
Agriculture share of GHG emissions (%)	23.3	14.4	8.7	10.1
Share of irrigated land in AA (%)	33.4	39.4	-	-
Share of agriculture in water abstractions (%)	..	87.0	47.0	49.5
Water stress indicator	..	..	8.7	..

Note: * or closest available year.

Sources: USDA Economic Research Service, Agricultural Productivity database; OECD statistical databases; FAO database and national data.

Historical trends in agricultural policies

Food security has been an important objective of agricultural and trade policy since India’s independence in 1947. Food shortages in the early 1960s made crop productivity and farm output a key policy ambition. While scope to further expand the area under cultivation was limited, the advent of the “green revolution” in the mid-1960s raised crop productivity through improved technologies and seed varieties. This was accompanied by expanded extension services and increased use of fertilisers, pesticides, and irrigation.

The government of India (GoI) introduced several marketing regulations affecting the sale, stocking, and trading of agricultural commodities. The Essential Commodities Act (ECA) introduced in 1955 provided for the control of production, supply, distribution, and pricing of essential commodities. During the 1960s and 1970s, most states also enacted and enforced Agricultural Produce Markets Regulation (APMR) Acts, with the first point of sale of agricultural products occurring at regulated market yards (mandis) under the responsibility of Agricultural Produce Market Committees (APMC). Two institutions were set up in 1965 to manage prices and distribution of wheat and rice, namely the Food Corporation of India (FCI) and the Agricultural Prices Commission, later renamed the Commission for Agricultural Costs and Prices (CACP). These institutions introduced complex domestic marketing regulations and border measures that increasingly penalised Indian farmers who often received less than international prices for their products.

In the 1970s, several government programmes were set up to increase production, covering industrial organisation, research, finance, and trade. In the case of milk production and processing, this took place at three levels:

• At the farm-level, dairy farmers were organised into co-operatives and provided with advanced technologies, such as animal breeds that produced more milk.

• At the district level, co-operative unions were formed, who owned and operated milk processing plants as well as storage and transport equipment and provided animal health services.

• At the state level, federations conducted and co-ordinated the nation-wide marketing of milk.

Government funding for agricultural research and extension increased, and many State Agricultural Universities (SAU) were set up. Institutional lending to farmers expanded by directing commercial banks (nationalised from 1969) to provide credit to agriculture. New financial institutions were established, such as the National Bank for Agriculture and Rural Development (NABARD) in 1982 and regional rural banks. Import competition was highly restricted to allow domestic agricultural production to increase.

In the 1980s and 1990s, yield-enhancing “green revolution” techniques were increasingly used, reaching new regions and crops such as pulses, oilseeds, and coarse grains. Broader economic deregulation at that time largely bypassed agriculture, in part because of the prevalence of state regulations in the sector. From 1980 to 1999, budgetary support to agriculture increased more than tenfold.

In the 2000s, agricultural policies focused increasingly on enhancing productivity and farmers’ incomes. The National Agricultural Policy (NAP), formulated in 2000, prioritised increasing cropping intensity on existing agricultural land, developing rural infrastructure, and developing and disseminating agricultural technologies. The National Policy for Farmers (NPF), approved in 2007, identified a need to focus more on the economic well-being of farmers than just on production.

The Eleventh Five-Year Plan 2007-12 focused on bringing technology to farmers, improving the efficiency of investments, access for the poor to land, credit, and skills, and addressing water management concerns. The Twelfth Five-Year Plan 2012-17 was articulated around more budgetary support to agriculture and infrastructure along with an aim to improve the functioning of markets, more efficient use of natural resources, and improved delivery of government services such as credit and animal health.

The 2012-17 plan established the Targeted Public Distribution System (TPDS) to replace the previous Public Distribution System (PDS, established in 1997). The new system aimed to reduce the amount of grain released from government stocks for distribution that did not reach intended beneficiaries.6 In addition, the plan redirected some food subsidies to other welfare schemes to better target the poor, introduced policies specific to individual states or areas, and redefined the definition of “poor” for the purpose of the TPDS. The 2013 National Food Security Act (NFSA) further addressed these concerns.

In 2016, the GoI set the target of doubling farmers’ income by 2022‑23, and by 2018 five-year plans were replaced by a framework of three-year action agendas. These agendas were prepared by the National Institution for Transforming India (NITI Aayog, the erstwhile Planning Commission of India), a policy think-tank of the government of India. The Agriculture Export Policy framework was established at the end of 2018, aiming to double agricultural exports by 2022-23 and boost the value-added of agricultural exports. To address farm indebtedness, several states implemented support packages for farm loan waivers between 2017 and 2020.

The only output support payments were introduced between 2018 and 2021 for the clearing of arrears for sugar cane deliveries. The subsidies were provided directly to sugar cane farmers. These were replaced in 2022 by a support scheme for first-stage buyers of sugar cane (the scheme for financially helping sugar mills on marketing costs and other processing costs).

Marketing regulations under the Agricultural Produce Market Committees (APMC) Acts were progressively amended in 2003, 2007 and 2017. This was to address concerns around highly fragmented markets, inadequate physical marketing infrastructure, large numbers of intermediaries in supply chains and insufficient remuneration to farmers. Even though state governments were encouraged to adopt similar reforms, implementation of agricultural marketing reforms remained highly differentiated across India’s states.

In June 2020, the GoI initiated reforms to domestic agricultural marketing regulations as part of a COVID-19 support package. The proposed reforms included a set of ordinances to deregulate major food crops from the 1955 ECA, allow farmers to sell their agricultural products outside of government-regulated markets and allow barrier-free inter- and intra-state trade of agricultural commodities. The central government had also proposed providing a legal framework for farmers to facilitate contract farming schemes with processors and other market actors in supply chains to reduce price risk. However, on 29 November 2021, the Parliament approved a bill withdrawing the three laws. Moreover, in December 2021, the GoI set up a committee to review the legal framework for the MSP system.

In 2022-23, India introduced export restrictions for several commodities with an open-ended timeframe and the objective of stabilising fluctuations in domestic prices following Russia’s war of aggression against Ukraine. Commodities affected by export bans, duties, or permits include various types of rice, wheat, sugar, and related products (e.g. wheat flour). In addition, India banned the export of onions at the end of 2023 before reintroducing in 2024 a 40% export tax and a minimum export price.

Fertiliser subsidies were reduced in financial year 2023/24 from INR 2.55 trillion (USD 31 billion) to INR 1.9 trillion (USD 23 billion). The 25.5% reduction was triggered by lower fertiliser prices during the 2023/24 marketing year.

As regards support to consumers, end November 2023, India extended for five years the Pradhan Mantri Garib Kalyan Anna Yojana programme providing free food grains to the poorest segments of the population. The programme started on 1 January 2024 and would cover more than 800 million beneficiaries and is expected to cost INR 11.8 trillion (USD 142 billion).

Environmental sustainability and resilience measures in agriculture – and climate-change adaptation measures in particular – have been gaining prominence, notably through programmes called “missions” focused on water management, integrated farming systems, and soil health management. In addition, the Union Budget 2022-23 promoted “chemical-free natural farming” throughout the country.

Table 14.4. India: Agricultural policy trends

Period	Broader framework	Changes in agricultural policies
1950-1965	Expansion of agricultural area was the main source of output growth	Agrarian reforms (abolition of intermediary landlordship, imposition of land ceiling) Strengthening of co-operative credit institutions Essential Commodities Act 1955
1965-1980	Increase in productivity main was the source of growth “green revolution”	Promoting the adoption of technological breakthroughs in rice and wheat production Policy support for marketing, research and credit Introduction and formalisation of lending to priority sectors, including agriculture New institutions, e.g. State Agricultural Universities, Food Corporation of India, Agricultural Prices Commission Programmes to increase production and processing of milk (support to breeds producing more milk, producer organisations, and processing and transport equipment) Minimum support prices
1980s	Widespread use of technology in major crop areas	Some delicensing and deregulation Increase in subsidies to agriculture
1990s	Economic and trade liberalisation in agriculture lags behind general economic reforms	Cautious relaxation of trade protection in some products, e.g. sugar, cotton, edible oils, wheat, rice Increases in input subsidies Targeting of beneficiaries of public distribution system of food grains
2000s	Demand-driven shift towards producing more fruit, vegetables and livestock products Increasing price gaps between international and domestic prices for producers	Alternate tightening and loosening of market and trade regulations (including export restrictions) Agricultural marketing regulations influencing pricing, procuring, stocking, and trading of commodities Large increases in input subsidies, including credit Support to high productivity seeds particularly cotton
Since 2010	Major participant in world markets for some commodities Continued price gaps between international and domestic prices taxing producers Increasing direct payments to producers Increasing support to consumers	More structured interaction between central and state level authorities Expansion of food subsidies and 2013 National Food Security Act Pilots to replace physical distribution of grains with cash transfers in selected states and Union Territories Agriculture Export Policy framework aimed at ensuring processed and organic products are not subject to export restrictions Doubling Farmers’ Income by 2022-23 action plan State-level support packages for farm loan waivers Direct income transfer programme PM-KISAN Changes to domestic agricultural marketing regulations initiated in 2020 as part of the COVID-19 economic support package; withdrawal of reforms at the end 2021 Export restrictions applied to several commodities in 2022 and 2023 (rice, wheat, sugar, onions, and related products)

Over the past two decades, producer support was composed of negative market price support (MPS), and budgetary allocations, including almost exclusively input subsidies. India’s percentage PSE fluctuated markedly, registering a high of zero in 2000, a low of ‑31% in 2007, followed by large swings before increasing negative support in 2021-23 (Figure 13.6). Export restrictions apply between 2022 and 2024 to various types of rice, wheat, sugar, onions, and related products (e.g. wheat flour). These variations were driven primarily by changes in the relative levels of domestic and international prices underlying MPS, while input subsidies followed a more steadily increasing trend. The particularly large absolute size of negative MPS in 2011-13 (and to some extent in 2007 and 2008) coincides with periods of high international commodity prices not or only partially transmitted to the domestic market, due at least in part to India’s use of export-impeding measures (for example, export restrictions or export bans applied in several of those years to wheat, non-basmati rice, chickpea, sugar and milk). The negative value of the PSE reflects that, on average, domestic producers were implicitly taxed, as the increasing budgetary payments to farmers did not offset the price-depressing effect of complex domestic regulations and trade policy measures. Payments not requiring production have been increasing since 2018, driven by higher budgetary allocations to the direct income transfer programme Pradhan Mantri Kisan Samman Nidhi (PM-KISAN). Against a backdrop of increasing reference prices for the exported commodities covered since 2020, MPS has been higher than during 2015‑19.

References

[3] Gulati, A., D. Kapur and M. Bouton (2020), “Reforming Indian Agriculture”, Economic & Political Weekly, Vol. 55/11, https://www.epw.in/journal/2020/11/special-articles/reforming-indian-agriculture.html (accessed on 15 March 2020).

[2] ICRIER (2022), Background Analysis for India chapter in Agricultural Policy Monitoring and Evaluation Reports.

[1] OECD/ICRIER (2018), Agricultural Policies in India, OECD Food and Agricultural Reviews, OECD Publishing, Paris, https://doi.org/10.1787/9789264302334-en.

Notes

← 1.  APMC Acts establish the framework for government procurement in the states. Differences exist among states in the status of their respective APMC Acts and in how these acts are implemented. In the seven states or Union Territories (UTs) that do not have an APMC act, procurement can take place outside mandis.

← 2.  Agriculture marketing also covers the futures market governed by the Securities and Exchange Board of India (SEBI), with the largest value of agricultural commodity trade taking place through the National Commodity Derivative Exchange (NCDEX). In addition, the Negotiable Warehouse Receipt System (NWRS) – established under the Warehousing Development and Regulatory Authority (WDRA) – aims to support farmers by storing products in warehouses. However, farmers, especially small and marginal, do not directly trade in agri-futures market in India.

← 3.  This represents the price below which exporters are not allowed to export a specific commodity. A minimum export price is set taking into consideration concerns about domestic prices and supply of that specific commodity.

← 4.  “Natural farming” is a chemical-free farming system rooted in Indian tradition enriched with modern understanding of ecology, resource recycling, and on-farm resource optimisation. It is considered as agroecology based diversified farming system which integrates crops, trees, and livestock with functional biodiversity. It is largely based on on-farm biomass recycling with major stress on biomass mulching, use of on-farm cow dung-urine formulations, maintaining soil aeration and exclusion of all synthetic chemical inputs. Natural farming is expected to reduce dependency on purchased inputs.

← 5.  AIDC was introduced in the 2021-22 Union Budget as a tax imposed on the commercial production of agricultural produce. The cess is imposed at a specific rate on the value of these goods. It aims to raise funds specifically for financing the development of agriculture infrastructure in India.

← 6.  The Targeted Public Distribution System (TPDS) plays the same role as the Public Distribution System (PDS) before the TPDS but with a special focus on the poor.