From farm support to market power: India’s new agricultural framework

India’s agricultural policy is entering a decisive new phase. The long-standing model centred on yield maximisation and subsidy support is gradually giving way to a framework driven by market integration, institutional strengthening and export competitiveness. This transition reflects a deeper structural shift — one that recognises agriculture not merely as a welfare sector, but as a strategic contributor to economic power, trade expansion and rural transformation.

With growing emphasis on high-value segments such as livestock, fisheries and plantation crops, alongside the rapid expansion of Farmer Producer Organisations (FPOs), digital advisory platforms and value-chain infrastructure, India is repositioning its farm economy for a more standards-driven, globally competitive era. The challenge now lies in balancing self-reliance with openness — ensuring that smallholders are not left behind as agriculture moves from protection to performance.

Indian agriculture_TPCI

India’s agricultural policy is undergoing a structural transition from a yield‑focused, subsidy‑driven approach to a trade‑oriented, market‑linked and institution‑centred model, a shift anticipated in earlier analyses of agricultural reforms and value‑chain integration (Chand and Singh, 2023; Birthal et al., 2020). Budget 2026 is a clear expression of this shift. It allocates about ₹1.63 lakh crore to agriculture and allied sectors for FY ’27, a rise of roughly 7% over the previous year, with a pronounced tilt towards high‑value segments such as fisheries, livestock and plantation crops. This strategic reorientation complements the India-EU Free Trade Agreement (FTA), which promises deeper market access for Indian agri‑exports but also demands higher standards, traceability and competitive scale (World Bank, 2023).

The Economic Survey 2025–26 documents how allied sectors like livestock and fisheries have outpaced crop agriculture in recent years, while small and marginal farmers continue to operate in fragmented, low‑productivity systems. It also notes that India has already met the target of forming 10,000 Farmer Producer Organisations (FPOs), signalling that collective institutions are no longer pilots but central pillars of the agrarian strategy (NABARD, 2024). In parallel, agriculture and allied exports still account for around 11–12 per cent of India’s total merchandise exports, underlining both the importance and the untapped potential of the sector (Exim Bank of India, 2025).​

Budget 2026: From Volume to Value

Budget 2026 marks a decisive move from broad‑based input subsidies towards targeted investment in value chains, infrastructure and institutional capacity, broadly consistent with recommendations of the Doubling Farmers’ Income Committee (Chand, 2017). The high‑value agriculture scheme (₹350 crore for FY ’27) prioritises crops such as coconut, cashew, cocoa, agar trees, almonds, walnuts and pine nuts, coupled with a Coconut Promotion Scheme to replace old trees with high‑yielding varieties in major producing States. Fisheries receive support through integrated development of 500 reservoirs and coastal value chains that explicitly involve start‑ups, women‑led groups and Fish Farmer Producer Organisations (FFPOs), echoing calls to treat fisheries as an export‑oriented growth engine (FAO, 2024).

On the technology front, Bharat‑VISTAAR—a ₹150‑crore, AI‑driven multilingual advisory platform linking AgriStack and ICAR packages—is designed to deliver customised advisories that reduce risk and increase productivity for farmers. Simultaneously, the ongoing computerisation of more than 67,000 Primary Agricultural Cooperative Societies (PACS) and investments through the Agriculture Infrastructure Fund aim to improve storage, logistics and market connectivity, reinforcing the move towards a digitally enabled rural financial ecosystem (RBI, 2024).

This budgetary design aligns with the broader Aatmanirbhar Bharat vision for agriculture: “The agriculture export basket needs to move beyond low‑value commodities to secure long‑term sustainability.” Moving from bulk exports of rice and sugar towards higher‑value fruits, vegetables, spices, livestock products and processed foods is essential if India is to stabilise farm incomes and build durable competitiveness in global markets (Policy Circle, 2020; Exim Bank of India, 2025).​​

FPOs in a Trade-Led Framework

The India–EU FTA underscores why FPOs are so critical to India’s trade‑led farm strategy. EU markets demand strict adherence to sanitary and phytosanitary norms, pesticide residue limits, sustainability metrics and carbon footprints—thresholds individual smallholders cannot meet alone (World Bank, 2023). FPOs provide aggregation, quality assurance and bargaining power; they can negotiate contracts, coordinate investments in grading, cold chains and certification, and act as a single interface for exporters and buyers (Chatterjee et al., 2019; World Bank, 2023).

Budget 2026 effectively positions FPOs, FFPOs and Livestock FPOs as the institutional vehicles that must translate domestic reforms into export‑ready supply chains. However, as NABARD’s 2024 assessment emphasises, many FPOs still face serious constraints in equity capital, managerial skills, governance systems and access to working capital (NABARD, 2024). Similar concerns are reflected in international literature on producer organisations’ uneven performance and risk of elite capture (Vorley et al., 2016; Trebbin, 2014). This means that merely counting FPOs will not suffice; sustained hand‑holding, dedicated credit lines, risk‑sharing instruments and professional support services are needed to make them globally competitive entities.​

Balancing Self-Reliance and Openness

The Policy Circle analysis captures a central tension in India’s agri‑trade strategy: “Trade Protection vs. Openness: Policy Circle” analysis highlights that while agriculture remains politically protected, trade deals are increasingly requiring adjustments, which may cause short‑term pressure.

On the one hand, the political economy of food security and farmer welfare continues to favour protective instruments such as MSP, stockholding and export controls (Gulati and Saini, 2019). On the other, agreements like the India–EU FTA and the broader push for export‑led growth require India to shift from ad‑hoc controls towards predictable, rules‑based trade and standards‑driven production, as highlighted in recent export preparedness and trade competitiveness studies (NITI Aayog, 2024; UNCTAD, 2026).

Aatmanirbharta in agriculture, therefore, cannot mean retreating behind high tariff walls; it must instead mean becoming competitive through higher productivity, better quality and stronger institutions (Chand and Singh, 2023; Policy Circle, 2020). FPOs, digital platforms and value‑chain investments financed under Budget 2026 are necessary steps in this direction, but they are not yet sufficient. The next phase of reform must focus on deepening FPO capabilities, clarifying functional roles among FPOs, cooperatives and PACS, and ensuring that trade‑led growth does not bypass small and marginal producers (NABARD, 2024; World Bank, 2023).

If India manages that balance—strengthening self‑reliance through competitiveness rather than insulation—Budgets and trade agreements alike can turn agriculture from a site of vulnerability into a core driver of economic power (Chatterjee et al., 2019; NITI Aayog, 2024).​​

References

Birthal, P.S., Hazrana, J., & Negi, D.S. (2020). Diversification in Indian agriculture towards high‑value crops: Multilevel determinants and policy implications. Land Use Policy.

Chand, R. (2017). Doubling Farmers’ Income: Rationale, Strategy and Action Plan. Committee Report, Government of India.

Chand, R., & Singh, J. (2023). From Green Revolution to Amrit Kaal: Transforming Indian Agriculture. NITI Aayog, New Delhi.

Chatterjee, T., Raghunathan, R., & Gulati, A. (2019). “Linking farmers to futures market in India.” Econstor Discussion Paper.

Exim Bank of India (2025). Promoting Agriculture Exports from India. Export‑Import Bank of India, Mumbai.​

FAO (2024). The State of World Fisheries and Aquaculture 2024. Food and Agriculture Organization of the United Nations.

Gulati, A., & Saini, S. (2019). Indian Agriculture: Towards a Market‑led Transformation. ICRIER, New Delhi.

NABARD (2024). Status of Farmer Producer Organisations in India. National Bank for Agriculture and Rural Development, Mumbai.​

NITI Aayog (2024). Export Preparedness Index 2024. NITI Aayog, Government of India.​

Policy Circle (2020). “Aatmanirbhar Bharat: Self‑reliance in agriculture first step towards economic power.” Policy Circle, 15 July 2020.​

RBI (2024). Report on Trends and Progress of Banking in India 2023–24. Reserve Bank of India, Mumbai.

Trebbin, A. (2014). “Farmer Producer Companies in India: A new concept for collective action?” Environment and Planning A.

UNCTAD (2026). Global Trade Update: Who wins when trade policies shift? United Nations Conference on Trade and Development, Geneva.​Vorley, B., Lundy, M., & MacGregor, J. (2009). “Business models that are inclusive of small farmers.” IIED / CIAT.

World Bank (2023). Farmer Producer Organisations and Agricultural Value Chains in India: Performance, Constraints, and Policy Options. World Bank Group, Washington, DC.​


This article is authored by Prof. Krishna Uppuluri, Assistant Professor, SGI’s Food and Agri Business School, Hyderabad and Dr. Shrabani Mukherjee, Independent Researcher. Views expressed are personal.

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