India's agricultural sector is on track to achieve a historic milestone, with foodgrain production in the 2025-26 fiscal year projected to surpass the previous record. This optimistic forecast comes despite facing significant headwinds from global trade disruptions, including tariffs imposed by the United States. The dual drivers of this growth are a favorable monsoon season that boosted sowing and significant policy interventions that reduced costs for farmers.
Robust Production Estimates and Seasonal Performance
Official projections from the agriculture ministry paint a promising picture for the current crop year. The total foodgrain output for 2025-26 (July-June) is expected to exceed the previous year's record of 357.73 million tonnes. This confidence stems from positive kharif harvests and encouraging progress in rabi sowing. Agriculture Secretary Devesh Chaturvedi confirmed the positive outlook, attributing it to above-normal southwest monsoon rains that benefited key growing regions.
According to the first advance estimates, kharif foodgrain production is pegged at 173.33 million tonnes, higher than the 169.4 million tonnes of the previous year. Within this, rice output is anticipated to cross 124.5 million tonnes, while maize is estimated at 28.3 million tonnes. However, the sector wasn't without its challenges, as excessive rainfall in September damaged crops in parts of western and eastern India.
The momentum has carried into the rabi season. Data up to December 19 shows the total rabi-sown area reached 659.39 lakh hectares, an increase of approximately 8 lakh hectares year-on-year. Wheat sowing saw a marginal rise to 301.63 lakh hectares, while pulses acreage expanded more significantly to 126.74 lakh hectares.
Policy Boost: GST Cuts and Support Schemes
A major catalyst for the sector's resilience has been proactive government policy. The most significant intervention came from the 56th GST Council meeting, which slashed the Goods and Services Tax on several critical agricultural inputs from 18% to 5%, effective September 22. This relief covered tractors below 1,800 cc, harvesters, irrigation equipment, tractor parts and tyres, as well as 12 categories of bio-pesticides, micronutrients, and fertiliser raw materials. Additionally, items like UHT milk, paneer, chhena, and Indian breads were moved to the zero-tax bracket.
Industry experts highlight that these measures reduced farming costs by an estimated 7–13%, leading to savings of Rs 50,000 to Rs 1 lakh on tractor purchases. Narinder Mittal, President and Managing Director of CNH India, noted that the GST relief supported demand by improving farmers' purchasing power and making mechanized solutions more affordable.
Government support extended beyond tax cuts. The agriculture ministry's allocation of Rs 1.37 lakh crore for 2025-26 funded ongoing welfare schemes. Key initiatives include the extension of the PM Fasal Bima Yojana and the Weather-Based Crop Insurance Scheme until 2025-26, with a total outlay of Rs 69,516 crore. The subsidy on DAP fertiliser was also increased by Rs 3,500 per tonne. A new scheme, the Pradhan Mantri Dhan-Dhaanya Krishi Yojana, earmarked over Rs 35,000 crore for 100 low-productivity districts, aiming to benefit about 1.7 crore farmers.
Navigating External Challenges and Future Focus
The sector's success story unfolds against a backdrop of external trade pressures. Reciprocal tariffs from the United States disrupted Indian agricultural exports, estimated at $5–6 billion annually. Affected products included shrimp, processed foods, spices, rice, guar gum, cashews, and dairy items, leading to market access losses and order cancellations. In response, exporters diversified into non-US markets, a strategy that helped agricultural exports grow by 9% year-on-year during the April-September period. Partial relief came in November with exemptions on over 200 food items, including tea, coffee, and spices.
Despite the record production, NITI Aayog member Ramesh Chand indicated that growth in the agriculture and allied sectors might slow to 4% for 2025-26, down from an earlier estimate of 4.6%, citing base effects.
As the sector looks toward 2026, unresolved issues remain in sharp focus. These include fragmented landholdings, climate volatility, post-harvest losses of 35–40% in perishables, and the exclusion of tenant farmers from welfare schemes. Consequently, industry stakeholders and farmers are keenly awaiting the government's first Cabinet decision of the new year, along with parliamentary approval of crucial legislation like the Draft Seeds Bill, 2025, and the Pesticide Management Bill, 2020, to tackle the persistent problem of fake agricultural inputs.
