Record Agriculture Output in 2025 Amid GST Cuts, US Tariffs; Seed, Pesticide Bills Eyed for 2026

India's agriculture sector closed 2025 with a projection of record foodgrain output surpassing last year's 357.73 million tonnes (MT) despite US tariffs disrupting farm exports, while landmark GST reforms delivered input cost relief, and stakeholders await passage of key seed and pesticide bills in 2026 to tackle fake inputs.

The year showed both resilience and fragility -- GST rate reductions delivered noticeable cost savings, while American tariff wall compelled market diversification, officials said.

"We are hopeful of achieving record foodgrain production this year 2025-26 (July-June). Kharif output remained positive and rabi sowing is progressing well," Agriculture Secretary Devesh Chaturvedi told PTI.

Above-normal southwest monsoons boosted kharif sowing, with the agriculture ministry's first advance estimate projected kharif foodgrain output at a record 173.33 MT for 2025-26, up from 169.4 MT in 2024-25.

Rice production is predicted to exceed 124.5 MT, with maize at 28.3 MT. However, excessive September rains wreaked havoc on crops in the western and eastern regions.

Rabi sowing as of December 19 reached 659.39 lakh hectares -- up 8 lakh hectares year-on-year. Wheat covered 301.63 lakh hectares (from 300.34 lakh hectares) while pulses expanded to 126.74 lakh hectares (from 123.02 lakh hectares).

Despite production advances, government think-tank NITI Aayog member Ramesh Chand estimated agriculture and allied sector growth of 4 per cent for the 2025-26 fiscal year, down from 4.6 per cent before, citing base effects.

Amid disconnect between record production and farmers' income, the year saw persistent protests by Samyukta Kisan Morcha (Non-Political) and Kisan Mazdoor Morcha in February at Punjab-Haryana borders, with demands for legal minimum support price guarantees based on Swaminathan formula, loan waivers, and pensions.

Police cleared the camps in March, ending farmer leader Jagjit Singh Dallewal's 123-day hunger strike. Farmer unions later held rallies against the India-UK FTA and draft seed bills.

US tariffs hit farm exports The 56th GST Council's decision to cut rates on farm inputs from 18 per cent to 5 per cent, effective September 22, emerged as 2025's most significant policy intervention. The reforms included tractors under 1800cc, harvesters, irrigation systems, tractor parts and tyres, alongside 12 specified bio-pesticides, micronutrients, and fertiliser raw materials.

Additionally, the council exempted UHT milk, paneer, chhena, and Indian breads at zero per cent, reducing input costs by 7-13 per cent and enabling farmers to save Rs 50,000 to Rs 1 lakh on tractor purchases. Chemical pesticides and fungicides, however, remained at 18 per cent GST.

"2025 has been a positive year for the farm equipment industry... The GST relief has supported demand by improving farmers' purchasing power and making mechanised solutions more affordable," CNH India President and Managing Director Narinder Mittal said.

US reciprocal tariffs impacted India's USD 5-6 billion annual agri exports to the US, officials said.

APEDA Secretary Sudhanshu noted impacts on shrimp, processed foods, spices, rice, guar gum, cashews, and dairy, causing lost access, slim margins, cancellations, and job risks.

The sector, however, demonstrated resilience through market diversification and relative competitiveness against higher-tariffed competitors like Vietnam.

Relief arrived in November through exemptions for over 200 food categories, including tea, coffee, spices, and cocoa.

Overall agricultural export growth in April-September 2025 recorded 9 per cent year-on-year growth, driven by non-US markets, Sudhanshu said.

Policy thrust continues With an enhanced budget of Rs 1.37 lakh crore for the 2025-26 fiscal year, the agriculture ministry focused on policies to raise farm incomes via higher productivity, lower costs, crop diversification, value addition, and direct aid.

The government's first Cabinet decision on January 1 extended PM Fasal Bima Yojana and Weather-Based Crop Insurance to 2025-26 (Rs 69,516 crore outlay) and raised DAP fertiliser subsidy by Rs 3,500/tonne -- maintaining a three-year tradition of farm-focused first cabinet decisions.

Major launches included the Pradhan Mantri Dhan-Dhaanya Krishi Yojana (over Rs 35,000 crore targeting 100 low-productivity districts and 1.7 crore farmers), Rs 11,440-crore National Pulses Mission, MSP hikes for rabi crops, and continuation of the Modified Interest Subvention Scheme.

Under PM Kisan Samman Nidhi, over Rs 3.75 lakh crore was disbursed cumulatively, with the 21st instalment in November supporting 9 crore farmers.

The electronic National Agriculture Market 2.0 was piloted in select mandis in Rajasthan and Tamil Nadu with automated bidding and logistics features, but technical issues await mid-January fixes.

Regulatory tightening To strengthen oversight on substandard crop inputs amid rising farmer complaints, the government amended Schedule VI of the Fertiliser Control Order (FCO), 1985, to regulate biostimulants.

Agriculture Minister Shivraj Singh Chouhan pledged tougher penalties in the upcoming Parliament session, including criminal prosecution and licence cancellations, for fake fertilisers and pesticides.

Fertiliser Secretary Rajat Kumar Mishra said there is robust availability of key soil nutrients through domestic production and imports from Saudi Arabia, Russia, and Morocco.

Still, China's renewed export restrictions on speciality fertilisers pose risks for 2026, as per industry experts.

Challenges and road ahead As 2025 ends, agriculture faces persistent challenges, including fragmented landholdings, climate change risks, 35-40 per cent post-harvest losses for perishables, and tenant farmers' exclusion from schemes.

For 2026, farmers await the government's first Cabinet decision for policy support aimed at reducing production costs and boosting farm incomes. Immediate focus remains on passage of the Draft Seeds Bill, 2025, and Pesticide Management Bill, 2020 in the next Parliament session.