In a significant policy shift, the Union government has announced its intention to develop agriculture as an industry, treating farming as a formal enterprise rather than a subsistence activity.
The announcement was made by Union Agriculture Minister at a national conference on agri-reforms in New Delhi on Wednesday.
What does ‘agriculture as industry’ mean?
Currently, agriculture in India is classified as a primary sector activity. This new approach would reclassify it to allow corporate structures, private investment, and industrial policies to apply to farming.
Under the proposed framework, farmers would be treated as micro-entrepreneurs. Agricultural land could be aggregated into production clusters. Contract farming, lease farming, and land leasing markets would be formally recognized and regulated.
The Minister stated, “We have treated farming as a way of life for seven decades. The time has come to treat it as a business. Only then will our farmers earn what they deserve.”
Key features of the proposed policy
The new ‘Agriculture as Industry’ policy, expected to be rolled out by January 2027, includes five major components:
1. Farmer producer organizations (FPOs) as enterprises – FPOs will get industry status, allowing them to access cheaper credit, avail tax benefits, and raise equity from markets.
2. Land leasing framework – A model land leasing act will be circulated to states, allowing farmers to lease out land without losing ownership rights. This will enable consolidation for mechanized farming.
3. Agricultural infrastructure status – Cold storage, warehousing, and primary processing units will get infrastructure status, unlocking long-term institutional finance.
4. Futures and options for all crops – Beyond the current six commodities, farmers will be able to hedge price risk for all notified crops through national commodity exchanges.
5. Private investment incentives – Companies investing in farm aggregation, precision agriculture, or contract farming will receive tax holidays and subsidized land for processing units.
Why this shift now
The government argues that India’s fragmented landholdings (86% of farmers own less than 2 hectares) make farming unviable. Average monthly farm income remains below ₹7,000, according to the latest NABARD survey.
“Small farms cannot afford technology, quality seeds, or scientific storage. By treating agriculture as an industry, we enable aggregation, investment, and economies of scale,” the Agriculture Secretary explained.
The policy is also seen as a response to stagnating agricultural growth, which fell to 1.8% in 2025-26 compared to 3.5% average over the previous decade.
Concerns raised by opposition and farmer unions
The announcement has drawn sharp criticism. Congress leader Jairam Ramesh called it “a backdoor entry for corporates to take over farmland.”
The All India Kisan Sabha has threatened protests if the policy is implemented without safeguards. “Industry status means profit motive. Profit motive means squeezing the small farmer. Land will consolidate in corporate hands,” said its general secretary.
Some economists also caution against treating agriculture as a uniform industry. “Agriculture is not manufacturing. It is ecologically sensitive and culturally embedded. Any policy must protect tenancy rights and prevent land alienation,” said economist Devinder Sharma.
State government reactions
BJP-ruled states like Uttar Pradesh, Gujarat, and Madhya Pradesh have welcomed the move. Opposition-ruled states including Punjab, Kerala, and Tamil Nadu have expressed reservations.
Punjab’s Agriculture Minister said, “We will not allow corporate farming in Punjab. Our farmers own their land, they are not labourers.”
What happens next
The central government will now prepare a draft bill to amend the Agricultural Produce and Livestock Marketing Act. The bill will be circulated among states for feedback before being introduced in Parliament.
A high-level committee has also been formed to recommend safeguards against land grabbing and to ensure minimum price guarantees even under the industry model.
The policy, if implemented, would represent the most fundamental shift in India’s agricultural framework since the Green Revolution.
