MUMBAI, 19 June 2025: India’s agriculture sector is on the brink of a historic transformation that could see its value triple over the next two decades, according to a comprehensive new report by global consultancy McKinsey & Company. The study, titled “Value Creation in Indian Agriculture”, estimates that the sector—currently worth between $580 billion and $650 billion—could grow to between $1.8 trillion and $3.1 trillion by 2047, driven by structural reforms, growing domestic demand, technological innovation, and expanded export capacity.
India, already among the world’s largest agricultural producers, stands to benefit from a unique combination of structural advantages. These include a large and fast-expanding middle class with increasing appetite for high-value foods, such as dairy, fruits, vegetables, and processed products. The report notes that by 2031, India could have the world’s largest middle class, reshaping consumption trends and providing a strong foundation for long-term agri-food growth.
In addition, India’s low costs of labor and electricity make it an attractive destination for agri-processing industries and bio-based manufacturing. The country’s substantial feedstock base—ranking among the top five global producers of rice, sugarcane, wheat, and maize—positions it as a natural leader in sectors such as bioethanol and industrial biochemicals.
A robust digital infrastructure is further accelerating this transformation. The widespread use of digital platforms like the Unified Payments Interface (UPI), Aadhaar, and mobile internet has created fertile ground for innovation in agri-finance, advisory services, and online marketplaces. With over 770 million internet users and more than 15 billion UPI transactions occurring each month, India’s rural economy is rapidly becoming digitally connected.
McKinsey also highlights the emergence of nearly 2,800 agritech startups across the country. These firms are pioneering new models in climate-resilient farming, biotech, supply chain digitization, and precision agriculture, many through "phygital" strategies that combine physical infrastructure with digital tools.
Despite these strengths, the report acknowledges the deep structural challenges that persist. Over 86 percent of Indian farmers operate on landholdings smaller than five acres, with the average size falling to just 2.7 acres. This fragmentation hinders mechanization and limits economies of scale. Although agriculture employs nearly half of the country’s workforce, its contribution to GDP remains at about 16 to 18 percent.
Nonetheless, the sector has shown consistent growth, expanding at an annual rate of five percent over the past six years. This resilience is partly attributed to government-led initiatives, including the Kisan Credit Card scheme, ethanol blending mandates, and the Digital Agriculture Mission. Formal lending to the sector has also surged, growing at over 14 percent annually between 2022 and 2024 and reaching $292 billion.
The report identifies four major segments that offer significant potential for value creation. The first is the industrial bioeconomy, especially bioethanol and bio-based chemicals, where India’s low-cost feedstock and policy support offer competitive advantages. With ethanol blending already above 18 percent, the country is on track to meet its 20 percent target by 2025–26.
Second, the agrochemicals sector—currently valued at $10 billion—could grow to $25–30 billion by 2047, powered by domestic demand and export potential. Direct farmer engagement and product differentiation will be key to capturing this opportunity.
Third, the agribiologicals market, which includes biostimulants and biocontrols, is expected to expand rapidly, reaching $600–640 million by 2030. With a projected annual growth rate of 9 to 10 percent, this eco-friendly segment could become an important contributor to sustainable agriculture.
The fourth major opportunity lies in processed food. As consumer preferences shift and incomes rise, India’s food processing industry—already worth $330 billion—is set for significant expansion. Companies that invest in branding, supply chain efficiency, and culturally relevant products are likely to lead this transformation.
Alongside these commercial opportunities, the report notes improvements in access to credit, insurance, and collective bargaining. The Kisan Credit Card scheme now benefits over 77.5 million farmers, and crop insurance coverage has risen to 37 percent under programs like the PM Fasal Bima Yojana. Farmer Producer Organizations (FPOs) and cooperatives, such as Amul and ITC, are helping farmers secure better prices and integrate into formal markets.
India's agri-export potential remains largely untapped. Although the country ranks among the world’s top producers of several commodities, its share in global agricultural exports hovers around 2 percent. Most of these exports are in raw or unprocessed form. However, digital platforms like e-Mandi and the Open Network for Digital Commerce (ONDC) are beginning to improve transparency, logistics, and market access.
If India can raise crop yields, accelerate adoption of agri-tech, and enhance post-harvest processing, it could boost sector growth by one to two percentage points annually above historical trends. This alone could unlock an additional $400 billion by 2035 and a cumulative $900 billion more by 2047.
The report concludes that Indian agriculture is at a strategic inflection point. Businesses that adapt to India’s unique agricultural ecosystem—marked by fragmentation, price sensitivity, and shifting consumption patterns—will be best placed to drive and benefit from the next phase of growth. The coming decades, McKinsey suggests, offer a defining moment for agribusiness, as the country moves toward becoming one of the world’s most dynamic agricultural economies.
