Why Budget 2026 must reinforce India’s seed momentum

For decades, policy debates around farming have been dominated by questions of subsidies, procurement and short-term relief to farmers. Today, the conversation is shifting, quietly but decisively, towards increasing productivity through science, innovation and long-term resilience.

At the heart of this shift lies the seed ecosystem, which will influence India’s food and nutritional security. Shifts in the policy landscape during the last year started when the Finance Minister mentioned the need to increase crop productivity in her budget speech . 

The draft Seeds Bill, 2025, which stirred intense discussion, signalled the Government’s resolve to extend its reform agenda to the sector which provides the most critical input in farming. 

For an industry that invests patiently over decades to deliver outcomes measured in yield stability, climate resilience and farmer satisfaction, policy reforms to encourage private sector investments in research are as important as reforms for ease of doing business.   

Case for research accreditation

One blind spot in India’s seed policy framework has been the absence of differentiation between research-intensive companies and those operating at a basic commercial level. 

Seed R&D is a multi-year, multi-location process that demands skilled scientists, data systems and sustained capital. Integration of molecular technologies in conventional breeding programs has significantly increased the cost of doing research.  Yet, the policy system treats all players alike. 

Establishing a National Register of Research-Based Seed Companies, based on an independent accreditation for a fixed five-year period, would be a structural reform of lasting value.

Such recognition would help regulators track credible research and incentivise investments in high-priority areas such as pulses, oilseeds, climate-resilience, pest resistance and sustainable agronomy.

Making ease of doing research real

Avoidable policy paralysis coupled with lack of coordination between states and centre has stiffled innovation in the seed sector. Even projects of national importance are not able to advance with predictable timelines resulting not only in cost over runs but, more importantly, loss of opportunity.

A scientifically stringent, globally benchmarked and time bound regulatory process will bring in the predictability which the investors need to commit resources towards high risk research which typically has long gestation cycle.  A Research Linked Incentive scheme can catalyse research investments in private sector, attract global partnerships and position India as a GCC destination for seed research.

Restoring the economics of innovation

Only a few Indian seed companies, like their global peers, spend 10-12 per cent of their revenue on R&D. The average R&D spend of around 3 per cent is not for lack of intent but because the economics of innovation have steadily weakened.

Restoring the 200 per cent deduction of research expenditure of seed companies would be a fiscally prudent and outcome-oriented intervention. Linked to transparent audits and annual reporting to technical committees, it would reward genuine innovation without opening the door for misuse.  Financial incentives for high risk research, predictable costs and timelines, and freedom to price based on value-to-farmers will restore the economics of innovation which has sadly been eroded over the last two decades.

Increasing seed exports

India’s seed industry is valued at around INR 30,000 crore, yet its share in global seed trade is barely 1 per cent. With the right policy architecture, this gap can be transformed into opportunity. FSII estimates suggest that holistic reforms could unlock over INR 800 crore in additional annual economic value and raise India’s global market share to 10 per cent by 2035.

A dedicated Production-Linked Incentive framework for seeds, Government support to create infrastructure such as seed export zones, ISTA-accredited testing facilities and dry ports near production centres coupled with targeted policy reforms can create the competitive strength to make India a seed production hub.

One nation, one licence

Inconsistent interpretations of national laws, fragmented State-level regulations, and procedural delays continue to undermine ease of doing business. The Draft Seeds Bill provides an opening to move decisively towards a “One Nation, One License” regime.

Mandatory testing-based variety registration, single-window national registration system, digital traceability of seed lots, harmonised implementation of relevant laws across states and streamlined approvals would strengthen regulatory compliance while accelerating the flow of improved varieties to farmers’ fields.

GST and the hidden cost to farmers

Seeds for sowing are GST-exempt, yet almost every activity that goes into developing, producing and delivering them is taxed. Therefore, GST on inputs get added to the cost.

This distortion quietly inflates seed prices for the farmers. Exempting inputs and services used in seed development, production and distribution from GST would lower costs and enhance the affordability of high-quality seeds.

Budget 2026 as a signal of intent

The draft Seeds Bill, 2025 has set high expectations. Budget 2026 gives Government the opportunity to not only reinforce its intent to roll-out transformative seed policy reforms but give those expectations fiscal and institutional backing. By aligning policy framework, taxation, incentives and regulations with its reforms agenda, the Government can send a clear signal that India’s agricultural future will be built not on subsidies , but on science driven farmgate prosperity.

This is not the industry’s demand for special treatment. It is a call for smart policy, one that recognises long-term investment, rewards credible research and ultimately empowers farmers with better choices and improved farm incomes. At this policy crossroads, optimism is not misplaced. With the right budgetary choices, India can turn this moment into a quantum leap for agricultural innovation.

The author is Director General, Federation of Seed Industry of India; views are personal