Short Overview

As India prepares for Union Budget 2026, the agriculture industry is calling for meaningful reforms that go beyond announcements and deliver real impact at the farm level. From tax relief and biofuel investments to fertiliser reforms, drone technology, and higher R&D funding, stakeholders believe this budget can define the future of Indian agriculture and rural incomes.

Union Budget 2026 is crucial for Indian agriculture as industry leaders demand tax relief, biofuel investments, fertiliser reforms, stronger infrastructure, drone technology support, and higher R&D funding. With rising climate risks and input costs, stakeholders urge the government to focus on clean energy, farmer income stability, agri-logistics, and market reforms. From sugar sector bio-energy hubs to GST relief on pesticides and ethanol pricing, these agriculture industry demands aim to make farming sustainable, competitive, and resilient while supporting India’s long-term growth and Viksit Bharat 2047 vision.

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Table of Contents

1. Introduction: Why Union Budget 2026 Matters for Agriculture
2. India’s Agriculture Vision: 2030 Goals and Viksit Bharat 2047
3. Agriculture Industry Demands Ahead of Union Budget 2026
4. Sugar Sector Reforms and Biofuel Expansion
5. Ethanol, Green Hydrogen and Sustainable Aviation Fuel Opportunities
6. GST and Pricing Challenges in the Sugar Industry
7. Fertiliser Sector Reforms and the 3D Reform Model
8. Self-Reliance and Capacity Expansion in Fertilisers
9. Coffee and Plantation Crops Facing Climate Pressure
10. Credit, Insurance and Mechanisation Needs of Farmers
11. Role of Agri-Logistics and Post-Harvest Infrastructure
12. Commodity Markets, NCDEX and Risk Management Reforms
13. Drone Shakti and the Future of Agri-Technology
14. Why R&D Funding Is Critical for Indian Agriculture
15. GST on Pesticides and Input Cost Burden on Farmers
16. Execution vs Announcements: The Real Challenge
17. Conclusion: Making Union Budget 2026 Work for Farmers

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1. Introduction: Why Union Budget 2026 Matters for Agriculture

Union Budget 2026 arrives at a defining moment for Indian agriculture. The sector is facing climate uncertainty, rising input costs, market volatility, and income pressure, while also being expected to drive rural growth and national food security. Industry leaders, farmer groups, and agri-businesses see this budget as an opportunity to move from short-term relief to long-term structural reform.

Ahead of the budget, several agriculture industry demands have emerged, focusing on tax relief, biofuel promotion, infrastructure development, and policy clarity. These demands reflect the urgent need to make farming sustainable, profitable, and globally competitive.

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2. India’s Agriculture Vision: 2030 Goals and Viksit Bharat 2047

India is nearing the midpoint of its agriculture targets for 2030, while also laying the groundwork for the ambitious Viksit Bharat 2047 vision. The government aims to transform agriculture from a subsistence-based sector into a modern growth engine that supports exports, clean energy, and rural employment.

To achieve this, stakeholders believe sustained investment in innovation, infrastructure, and market reforms is essential. Without these, Indian agriculture risks falling behind global competitors despite its scale and potential.

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3. Agriculture Industry Demands Ahead of Union Budget 2026

The agriculture industry demands for Union Budget 2026 broadly focus on four core areas: financial relief, clean energy transition, technology adoption, and farmer income stability. Representatives from sugar, fertiliser, coffee, crop science, agri-logistics, and commodity markets have all voiced concerns and expectations.

At the heart of these demands is a simple message: farmers and agri-businesses need predictable policies, lower tax burdens, and better infrastructure to manage risks and grow sustainably.

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4. Sugar Sector Reforms and Biofuel Expansion

One of the strongest sets of demands has come from the sugar industry. In a representation to Finance Minister Nirmala Sitharaman, the All India Sugar Trade Association (AISTA) called for targeted financial support to help sugar mills transition into integrated bio-energy hubs.

The association has sought an allocation of ₹2,500 crore to promote advanced biofuels such as sustainable aviation fuel and green hydrogen. This move is seen as critical for aligning the sugar sector with India’s clean energy goals while improving long-term financial viability.

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5. Ethanol, Green Hydrogen and Sustainable Aviation Fuel Opportunities

Ethanol is emerging as a strategic fuel that can support multiple industries, including aviation and hydrogen production. India already imports large quantities of vegetable oil, and ethanol can play a key role in alcohol-to-jet technology for sustainable aviation fuel.

Producing green hydrogen requires high energy input, and ethanol-based infrastructure can help reduce costs while supporting sugar mills. Industry leaders believe that encouraging ethanol-based hydrogen production will strengthen the sugar industry and reduce dependence on fossil fuels.

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6. GST and Pricing Challenges in the Sugar Industry

Many sugar mills, especially cooperative mills in Maharashtra, Uttar Pradesh, and Punjab, lack distillation capacity and rely heavily on sugar and molasses sales. This limits their ability to meet financial commitments such as cane price payments and wages.

AISTA has demanded a reduction in GST on flex-fuel and strong hybrid vehicles to 5 percent, aligning them with electric vehicles. It has also sought an increase of ₹6–8 per litre in ethanol procurement prices and a revision of the minimum selling price of sugar, which has remained unchanged since 2019. Linking the fair and remunerative price of sugarcane with MSP on an annual basis is also seen as essential for farmer income security.

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7. Fertiliser Sector Reforms and the 3D Reform Model

The fertiliser industry expects Union Budget 2026 to introduce a “3D Reform” of the Fertiliser Control Order, focusing on digitisation, decriminalisation, and deregulation. According to Rajib Chakraborty of the Soluble Fertiliser Industry Association, these reforms can help modernise the sector and reduce compliance burdens.

There is also a strong push to promote residue-free, nutrient-rich farming as part of a national agriculture and health strategy. Recognising non-subsidised soluble, organic, and micro-nutrient fertilisers as strategic materials could encourage innovation while gradually reducing subsidy dependence.

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8. Self-Reliance and Capacity Expansion in Fertilisers

Industry leaders like Nishant Kanodia of Matix Fertilisers and Chemicals believe continued policy support is essential for capacity expansion and self-reliance. Investment-friendly frameworks can reduce India’s dependence on imports and protect farmers from global supply disruptions.

Stable fertiliser availability at predictable prices remains critical for food security and farmer confidence.

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9. Coffee and Plantation Crops Facing Climate Pressure

India’s coffee sector is under growing stress due to climate uncertainty, rising cultivation costs, and labour shortages. Rana George of Kelachandra Coffee has highlighted the need for improved irrigation, expanded crop insurance, and long-tenure credit for replanting ageing plantations.

Despite strong global demand for Indian coffee, farmers struggle to maintain productivity without adequate policy support and climate-resilient solutions.

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10. Credit, Insurance and Mechanisation Needs of Farmers

Stakeholders have stressed that affordable credit and robust crop insurance are no longer optional but essential. Mechanisation support can help address labour shortages, especially in plantation crops.

Long-term financing for replanting and farm modernisation can improve yields and reduce vulnerability to climate shocks.

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11. Role of Agri-Logistics and Post-Harvest Infrastructure

Simon Wiebusch of Bayer Crop Science for India, Bangladesh, and Sri Lanka has emphasised the need for sustained investment in agri-logistics and post-harvest infrastructure. Poor storage, transport inefficiencies, and lack of cold chains continue to erode farmer incomes.

Predictable trade policies and better logistics can stabilise markets and reduce price volatility for farmers.

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12. Commodity Markets, NCDEX and Risk Management Reforms

Arun Raste, MD and CEO of NCDEX, has called for rationalising or removing the Commodity Transaction Tax. Clear GST guidelines for commodity derivatives can improve hedging options and risk management tools for farmers and agri-traders.

Efficient commodity markets are essential for price discovery and income stability.

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13. Drone Shakti and the Future of Agri-Technology

Drone technology is expected to play a major role in precision farming, spraying, and crop monitoring. Preet Sandhu of AVPL International believes strengthening the Drone Shakti initiative through manufacturing incentives can move India from pilot projects to large-scale deployment.

This would also position India as a global hub for agricultural drone manufacturing.

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14. Why R&D Funding Is Critical for Indian Agriculture

Dr. R.G. Agarwal of Dhanuka Agritech has highlighted that India spends only about 0.7 percent of GDP on research and development, far less than global leaders like the US, China, and Israel.

Restoring income-tax incentives for private-sector research and increasing public funding can strengthen innovation and global competitiveness. Without strong R&D support, Indian agriculture risks stagnation in a rapidly evolving global market.

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15. GST on Pesticides and Input Cost Burden on Farmers

Pesticides, often described as plant medicines, currently attract 18 percent GST, similar to luxury goods. Industry leaders argue this places an unnecessary burden on farmers.

Reducing GST on pesticides to 5 percent, similar to essential human medicines, could significantly lower input costs while supporting crop protection.

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16. Execution vs Announcements: The Real Challenge

While stakeholders acknowledge that several initiatives announced in previous budgets are now moving towards implementation, the key concern remains execution. Policies must translate into visible benefits at the farm level.

Clear timelines, accountability, and coordination between central and state governments will determine the real success of Union Budget 2026.

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17. Conclusion: Making Union Budget 2026 Work for Farmers

Union Budget 2026 has the potential to redefine Indian agriculture by aligning farmer welfare with clean energy, innovation, and global competitiveness. Addressing agriculture industry demands for tax relief, biofuel support, infrastructure investment, and R&D funding can create a resilient and future-ready farming ecosystem.

The focus must now shift from intent to impact. If implemented effectively, these reforms can strengthen rural incomes, enhance food security, and position Indian agriculture as a true growth engine for the nation.