The report said India’s growing middle class is expressing greater demand for high-value and processed agricultural products, such as fruits and vegetables and protein sources like paneer, curd, and butter
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RITU RAJ KONWAR
Highlighting that India’s $580-650 billion agriculture sector is the world’s fastest-growing —at 5 per cent annually in the past six years—a report by McKinsey said it can reach to $ 1.4 trillion by 2035.
“India’s agriculture sector is host to multiple structural advantages vis-à-vis other agriculture economies that, if leveraged to their full potential, could accelerate growth of the sector to $ 1.4 trillion by 2035 and $ 3.1 trillion by 2047,” it said in a report titled “value creation in Indian agriculture”.
The growth in last six years was driven by structural reforms and increased formalisation, built within a large and varied ecosystem. Across India, the farm sector is built on a fragmented base of farmers and value chains, making it challenging to profitably scale solutions.
“A combination of external tailwinds and internal momentum—driven by factors ranging from structural reforms to digital and technological innovation—has propelled India to emerge as one of the world’s largest and fastest-growing agricultural economies. As agricultural supply chains become increasingly interconnected, India’s scale as an agricultural producer and exporter positions it as a critical player in the shifting global agricultural landscape,” McKinsey said.
India’s agricultural landscape has five structural advantages such as large consumer base, cheaper manufacturing costs, feedstock availability, digital infrastructure and innovation, it said adding stakeholders can leverage on these benefits.
Middle class growth
Explaining in details, the report said India’s growing middle class is expressing greater demand for high-value and processed agricultural products, such as fruits and vegetables and protein sources like paneer, curd, and butter. The manufacturing cost advantages stem from a combination of structural, economic, and policy factors, as well as strong workforce of 607 million people (as of 2024).
India is the world’s largest producer of rice, second-biggest in sugarcane and wheat and the fifth-largest in maize. India also has the lowest cost of production for rice and maize and the second lowest for sugar, it said.
It has identified four areas of potential opportunity —Bio building blocks (bio-to-X), Processed foods, Agrochemicals and Agribiologicals.
McKinsey has also identified 40 business segments across India’s agricultural value chain which hold most potential in the coming years as these aggregate to about $533 billion in revenues and $42 billion in profits (EBITDA) based on 2024 estimates.
Bioeconomy growth
India’s bioeconomy has experienced remarkable growth, expanding from $10 billion in 2014 to $165 billion in 2024. Within bio building blocks, two emerging opportunities stand out— bioethanol and bio butanediol. To succeed in bio-based manufacturing, players will need reliable, low-cost feedstock access, strategic plant location, and flexible, multi-feedstock setups that can adapt to market and regulatory shifts, it said.
Domestic agrochemicals market for crop protection is valued at $4 billion, growing at 3-5 per cent per annum, and the export market is valued at $5.5 billion, growing at 5-6 per cent. In total, Indian agrichemicals could see a combined scale-up to $25 billion to $30 billion by 2047, from around $10 billion in 2024.
The agribiologicals market, segmented into biostimulants including biofertilizers and biocontrols, is expected to grow at a CAGR of about 9-10 per cent, expanding to $600 million to $640 million in 2030, from $350 million in 2024.
Valued today at about $330 billion, India’s agricultural processing sector is crucial in linking farm production to consumer demand, driving added value and economic growth.
Published on June 4, 2025