With India making rapid strides on many fronts under the leadership of Prime Minister Narendra Modi, the agriculture sector is gaining greater significance, as has been evident from the past few Budgets. This progress, and the fact that this is the first full Budget of Modi 3.0, has heightened anticipation for the upcoming Union Budget 2025-26, as stakeholders across the agricultural ecosystem look forward to enabling policies that will drive growth, sustainability, and innovation.
One of the main pain points of farmers is the losses to their crops. Indian farmers lose crop production worth over ₹2 lakh crore annually due to pests, highlighting the importance of effective crop protection solutions. The Indian domestic crop protection industry is projected to grow at a compound annual growth rate (CAGR) of 5 per cent from FY23 to FY28. This growth will be driven by several factors including the need for innovative products for growers to address their current and newer challenges in meeting yield and quality improvements. Government support for the industry, expansion of local production capacities by companies, will be supporting this growth.
Aligning with ‘Make in India’ initiative
The industry considers measures such as reducing GST on agrochemicals to 12 per cent and introducing production-linked incentives (PLI) for manufacturing new crop protection molecules to be vital. The government’s anticipated introduction of a PLI to boost local drone manufacturing is a promising move to drive innovation.
The integration of drones, AI, IoT, and precision farming tools has the potential to empower farmers with data-driven insights, optimise resource utilisation, and enhance productivity. For example, the Indian agricultural drone market is projected to surge from $145.4 million to $13 billion by 2030, underscoring the scope for change. These steps would enhance domestic competitiveness and integrate India into global supply chains, aligning with the government’s “Make in India” initiative.
The narrowing urban-rural consumption gap – from 83.9 per cent in 2011-12 to 69.7 per cent in 2023-24 – signals increasing rural economic activity, which augurs well for the agriculture industry. Accelerated adoption of technology can further empower rural India. Drones, artificial intelligence (AI), and precision farming tools offer transformative potential by optimisng resource use and improving productivity.
AI is revolutionising agriculture by transforming various aspects of the sector. In R&D, machine learning models are used to identify novel active ingredients for synthetic and biological products. On the field, AI-driven systems enable reliable monitoring and prediction of soil health, providing high-resolution maps of soil nutrients, texture, and carbon content to support better decision-making.
Tax deductions for R&D
Gen AI-powered digital tools are acting as virtual agronomic advisors, helping farmers optimise crop management practices. In pest management, precision agriculture uses data-driven insights to apply crop protection products only to infested areas, improving efficiency and sustainability. Additionally, AI enhances supply chain management through accurate demand forecasting, market predictions, and waste reduction, ultimately optimising logistics and boosting overall efficiency. The Budget must promote initiatives to boost these trends.
Additionally, extending weighted tax deductions of up to 200 per cent for R&D investments would incentivise the development of new crop protection products, bio-stimulants, and environmentally friendly chemistries.
The agrochemicals industry is committed to promoting sustainable farming through stewardship programmes that emphasis the safe and judicious use of crop protection products. The Government should consider allowing tax waivers of up to 150% of the investments made by companies on stewardship efforts and promoting good agricultural practices out of the income tax liabilities of companies.
Extending export sops
Export incentives under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme should be extended beyond to support agrochemical manufacturers competing in global markets. India’s agrochemical exports, primarily to the US, Brazil, and the European Union, contribute significantly to the industry’s growth. A balanced approach – encouraging domestic production while supporting exports – will position India as a global leader in crop protection solutions.
Budget 2025 represents an opportunity to strengthen Indian agriculture’s foundations and enhance its global competitiveness. By addressing the needs of the agrochemicals industry – reducing GST rates, incentivising R&D, and maintaining low customs duties – the government can catalyse growth while ensuring that farmers have access to affordable, high-quality crop protection solutions.
As rural India flexes its economic muscle, leveraging technology, promoting sustainability, and fostering inclusivity will be essential to achieving long-term resilience and prosperity.
The author is Managing Director & Country Head, Syngenta India Pvt. Ltd. The views expressed are strictly his personal
