Growth and Development of the Agriculture Sector in India

India’s agriculture sector is far more than a source of food – it is the backbone of the national economy, a livelihood for hundreds of millions, and an increasingly competitive player in global markets. According to India’s Economic Survey, agriculture and allied activities together account for nearly 18% of India’s GDP and support the livelihoods of over 42% of the population. Over the past decade, this sector has transformed significantly – not just in scale, but in the diversity of what it produces and exports. Subsectors like livestock, horticulture, and fisheries are now driving growth just as much as traditional food grain cultivation.

India’s agricultural output: the big picture 🔗

India’s agricultural output has expanded by 40% over the past decade, achieving surplus capacity for exports. In FY25, the sector grew 5.4% year-on-year, supported by record production and stronger trade volumes. Agricultural exports reached an all-time high of Rs. 4,40,000 crore (approximately US$ 51.86 billion) in FY25, up from Rs. 3,95,793 crore the previous year. This momentum reflects both improved farm productivity and the government’s active push to integrate Indian agriculture into global supply chains.

Food grain production tells a similar story of steady progress. Foodgrain output for 2024-25 is projected at a record 3,539.59 lakh metric tonnes (LMT), up 6.5% from the previous year. Rice production alone is expected to reach 1,490.74 LMT – an increase of over 112 LMT year-on-year. India now supplies rice to more than 172 countries, making it a dominant force in the global grain trade.

Agriculture’s contribution to gross value added (GVA) 🔗

When measuring an economy’s output from agriculture, economists use the concept of Gross Value Added (GVA) – the value of agricultural goods produced minus the cost of inputs. The GVA of agriculture and related sectors improved from 24.38% in FY15 to 30.23% in FY23, reflecting how the sector has grown not just in absolute output but in its share of the national economy. Agricultural income has increased at an annual rate of 5.23% over the past decade, driven by rising productivity, better market access, and government support schemes like the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) and the Per Drop More Crop (PDMC) initiative.

Food grain production: a foundation of food security 🔗

Food grains – which include rice, wheat, pulses, and coarse cereals – remain the cornerstone of India’s agricultural identity. India is one of the world’s leading cereal producers, accounting for 11.6% of the world’s total cereal output. The government has continuously revised Minimum Support Prices (MSPs) for both Kharif and Rabi crops, ensuring farmers receive at least a 50% margin over their weighted average cost of production since 2018-19.

Despite this growth, challenges remain. Growth in the crop sector slowed to 1.4% in 2023-24, largely due to the El Niño-driven rainfall deficits that reduced food grain output. This episode highlights how dependent traditional crop production remains on monsoon patterns and climate conditions. The five-year average annual growth rate for the agriculture sector, however, stands at a more robust 4.18%, demonstrating underlying resilience.

The livestock sector: a growing engine of agricultural GVA 🔗

While food grains often take centre stage in conversations about Indian farming, the livestock sector has quietly become one of the most significant contributors to agricultural value. From 2014-15 to 2022-23, the livestock sector grew at a CAGR of 7.38% at constant prices, outpacing the growth of traditional crop agriculture. Its contribution to total agricultural GVA rose from 24.32% in 2014-15 to 30.38% in 2022-23 – a substantial shift in the composition of India’s farm economy.

Employment and livelihoods 🔗

The livestock sector is a critical source of rural employment and income, particularly for small and marginal farmers who cannot depend solely on crop revenues. The sector provides employment to approximately 8.8% of India’s total population. Beyond direct farm employment, it supports millions of workers in dairy processing, meat production, transport, and retail. Livestock contributes approximately 16% of small farm household income, compared to a 14% average for all rural households – highlighting its outsized role in the income of vulnerable farming communities.

Milk, eggs, meat, and foreign exchange 🔗

India is the world’s largest producer of milk, with output rising from 146 million tonnes in 2014-15 to 230.6 million tonnes in 2022-23, representing a CAGR of 5.85%. Egg production has grown even faster at a CAGR of 7.35%. On the export side, India exported buffalo meat worth Rs. 25,648 crore in 2022-23, reinforcing the livestock sector’s contribution to national foreign exchange earnings. Government schemes like the Animal Husbandry Infrastructure Development Fund (AHIDF) are further strengthening this sector by promoting investments in dairy processing, meat processing, and animal feed plants.

The horticulture sector: high value from less land 🔗

Horticulture – the cultivation of fruits, vegetables, flowers, spices, and medicinal plants – has emerged as one of the most dynamic components of Indian agriculture. The horticulture sector now contributes approximately 33% to agriculture’s GVA, a remarkable achievement given that it occupies only about 13-18% of the gross cropped area. This efficiency is the defining feature of horticulture: horticulture crop productivity stands at 12.49 tonnes per hectare, compared to just 2.23 tonnes per hectare for food grains.

Production growth and global standing 🔗

Horticulture production climbed from 280.7 million tonnes in 2013-14 to 367.72 million tonnes in 2024-25, with output now surpassing total food grain production – from a significantly smaller land base. This growth has been broad-based: in 2024-25, production comprised 114.51 million tonnes of fruits, 219.67 million tonnes of vegetables, and 33.54 million tonnes from other horticultural crops including spices, flowers, and medicinal plants. India now ranks second globally in the production of fruits and vegetables, leading in the production of onions, ginger, okra, bananas, mangoes, and papayas according to the Food and Agriculture Organization (FAO).

Income generation and farmer benefits 🔗

Horticulture crop productivity increased by approximately 38.5% between 2004-05 and 2021-22, following the launch of the National Horticulture Mission. This productivity gain has translated directly into higher incomes for farmers, particularly those with small and marginal landholdings who can cultivate high-value crops like strawberries, capsicum, or spices on limited acreage and earn more per unit of land than from staple cereals. The government has also supported this sector through the Mission for Integrated Development of Horticulture (MIDH), which covers fruits, vegetables, spices, flowers, and medicinal plants under a single centrally sponsored scheme.

Export potential and remaining gaps 🔗

India’s horticulture exports have a significant untapped opportunity. Despite being a top global producer, India holds only about 1% of the global horticultural export market and ranks 14th in vegetable exports and 23rd in fruit exports. Post-harvest losses – estimated at 15-20% of fruits and vegetables produced – along with inadequate cold storage infrastructure and food safety compliance challenges in key export markets like the EU, continue to limit the sector’s global reach. The government has responded with the Horticulture Cluster Development Programme (CDP), which aims to boost cluster-specific exports by approximately 20% and build internationally recognized brand identities for Indian produce.

The fisheries sector: a sunrise contributor 🔗

Rounding out India’s allied agriculture story is the fisheries sector, which has grown at a CAGR of 8.9% between 2014-15 and 2022-23 and contributes approximately 6.72% of agricultural GVA. Fish production increased by more than 140% during 2014-2025, compared to the preceding decade, supported by government schemes like the Pradhan Mantri Matsya Sampada Yojana (PMMSY). The sector supports approximately 30 million people, particularly from marginalized coastal and inland communities, and seafood exports rose from Rs. 46,663 crore in FY20 to Rs. 60,524 crore in 2023-24 – a growth of nearly 30%.

Government policies driving sector-wide growth 🔗

India’s agricultural growth has not been accidental – it has been deliberately steered by a range of policy initiatives. The Per Drop More Crop (PDMC) scheme has brought 95.58 lakh hectares under micro-irrigation, dramatically improving water use efficiency. The e-National Agriculture Market (e-NAM) has digitized agricultural trading, giving farmers direct access to buyers across states. The Digital Agriculture Mission is integrating crop surveys, farmer registries, and agri-analytics platforms to bring data-driven decision-making to the grassroots level. Looking ahead, India’s food processing sector is projected to reach US$ 1.1 trillion by FY35, positioning agriculture not just as a primary production activity but as the base of a much broader value chain encompassing processing, logistics, and exports.

Challenges that cannot be ignored 🔗

India’s agricultural progress has been impressive, but structural challenges persist. Over 85% of India’s farm holdings are small and marginal, averaging below 2 hectares, making mechanization and scale difficult without shared-service models and cooperative frameworks. Climate variability remains a major risk – as the 2023-24 El Niño episode demonstrated, even a single poor monsoon can sharply depress crop output and sector-wide GVA. Soil health, particularly nitrogen-phosphorus imbalances, and the heavy reliance on imported edible oils – with oilseeds growing at a modest CAGR of just 1.9% – are areas that require targeted investment. Bridging the gap between strong domestic production and global export competitiveness, especially in horticulture and processed foods, remains the sector’s most pressing opportunity.

What do you think? India’s horticulture sector now contributes more to agricultural GVA than its land area would suggest is possible – does this mean traditional food grain farming needs a fundamental rethink in how land is allocated and subsidized? And with livestock and fisheries consistently outgrowing crops in their GVA contribution, should these allied sectors receive a larger share of agricultural research and public investment?

References

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