McKinsey Predicts India’s Agriculture Could Reach $1.4 Trillion by 2035 Through Structural Advancements
India’s Agriculture Sector Poised for Massive Growth: McKinsey Report
India’s agriculture sector is projected to reach $1.4 trillion by 2035 and $3.1 trillion by 2047, driven by structural advantages, increased productivity, and technological advancements, according to a recent report by McKinsey. The report highlights the growth potential in agri-biologicals, processed foods, and ethanol-linked feedstock opportunities.
The report emphasizes that India has emerged as one of the world’s largest and fastest-growing agricultural economies, thanks to factors such as structural reforms and digital and technological innovations.
Currently, the agriculture sector contributes 16% to 18% of India’s GDP, amounting to $580 billion to $650 billion. With a projected growth rate of 6 to 7%, the sector could potentially add an incremental $400 billion by 2035, reaching $1.4 trillion.
The report suggests improving crop yields by 15% to 40% through the use of high-yielding variety seeds, specialty fertilizers, biologicals, and enhanced farming practices. It also recommends expanding downstream processing for greater value addition potential.
India holds structural advantages in agriculture, including rising demand for high-value and processed agricultural products, cost advantages in manufacturing, feedstock advantage for ethanol production, robust digital payments infrastructure, and a booming agtech sector. The country ranks as the second-largest producer of rice, sugarcane, and wheat globally.
Despite challenges such as regional disparities in credit access, agricultural financing has been growing at a rate of over 14% annually, reaching up to Rs 25 lakh crore (about $292 billion) from 2022 to 2024.
The report acknowledges that while India’s agriculture sector is labor-intensive and struggles with lower productivity compared to other regions, it also presents numerous structural advantages that could pave the way for further growth and opportunities.
In conclusion, the report identifies key areas of growth potential in the agriculture sector, including bio building blocks, agrichemicals, agri-biologicals, and processed foods.
