Budget 2026: New Coconut & Sandalwood Schemes to Boost Farmer Incomes

A Strategic Push for High-Value Agriculture

Union Budget 2026 has signaled a significant policy shift towards diversifying India's agricultural basket, with a pronounced focus on high-value crops. Finance Minister Nirmala Sitharaman announced a series of targeted interventions aimed at boosting farmer incomes, creating rural employment, and modernising farming practices. Central to this strategy are new dedicated schemes for promoting coconut and sandalwood cultivation, two crops with immense economic and cultural significance for India.

The government's intent is to move beyond traditional staple crops and encourage farmers, particularly in coastal and hilly regions, to cultivate products with higher market value. This initiative is part of a broader vision to make agriculture more remunerative and resilient, with specific support also announced for cashew, cocoa, and various nuts.

Revitalising India's Coconut Sector

India stands as the world's largest producer of coconuts, a sector that provides livelihoods for approximately 30 million people, including nearly 10 million farmers. Recognising its importance, the Budget introduced a new 'Coconut Promotion Scheme' designed to enhance productivity and competitiveness.

The core of the scheme involves targeted interventions to replace old, non-productive coconut trees with new, improved, and high-yielding saplings. This measure will be implemented across major coconut-growing states. By focusing on improving the genetic stock of plantations, the government aims to significantly increase yields per tree, thereby boosting the overall income for farmers and strengthening India's position in the global market.

Restoring the Glory of Indian Sandalwood

Sandalwood, a tree deeply intertwined with India's cultural and social heritage, has also received dedicated support in the budget. The government plans to launch a focused programme to restore the traditional Indian sandalwood ecosystem. This will be achieved through strategic partnerships with state governments to promote scientific farming techniques and establish efficient post-harvest processing infrastructure.

The initiative aims to revive the cultivation of this high-value aromatic wood, which has faced challenges over the years. By encouraging structured and scientific cultivation, the government seeks to create a sustainable supply chain, curb illicit trade, and allow farmers to benefit from the premium prices that Indian sandalwood commands globally.

Key Provisions of the New Farming Schemes

To provide a clear overview, the key features of the announced schemes are summarized below:

Feature	Coconut Promotion Scheme	Sandalwood Support Programme
Primary Goal	Enhance production & productivity	Restore the sandalwood ecosystem
Key Intervention	Replacement of non-productive trees	Promotion of scientific farming & post-harvest processing
Implementation Model	Direct interventions in major growing states	Partnership with state governments
Target Beneficiaries	~10 million coconut farmers	Farmers in suitable agro-climatic zones
Expected Outcome	Increased global competitiveness and yields	Sustainable supply and higher value realisation for growers

Financial Support and Economic Impact

While the budget speech laid out the strategic direction, detailed financial outlays and the specific structure of subsidies are expected to be announced by the relevant ministries. The support is likely to include subsidies for high-quality saplings, technical assistance for scientific farming practices, and the development of market linkages to ensure farmers get fair prices. For sandalwood, support for post-harvest processing will be crucial for value addition.

This focused push is expected to have a ripple effect across the rural economy. It will encourage crop diversification, reduce dependence on monsoon-sensitive crops, and create new employment opportunities, particularly for rural youth engaged in value addition and processing activities.

Market Sentiment and Long-Term Outlook

The announcement has been viewed positively by industries that rely on these commodities. For FMCG companies involved in coconut-based products, a more productive and stable domestic supply chain is a significant advantage. Similarly, the perfumery, cosmetics, and wellness industries will benefit from a revived and organised supply of authentic Indian sandalwood.

For investors, these schemes signal long-term policy stability and government support for the high-value agriculture sector. Companies in the agri-input, food processing, and consumer goods spaces with exposure to these commodities may see improved raw material security and growth prospects in the coming years.

Conclusion: A Future-Ready Agricultural Policy

Union Budget 2026's emphasis on coconut and sandalwood is a clear indicator of the government's strategy to make Indian agriculture more profitable and globally competitive. By promoting high-value crops, the policy aims to directly enhance farmer incomes and build resilient rural economies. The success of these schemes will now hinge on effective on-ground implementation, timely release of funds, and the creation of a supportive ecosystem for farmers to transition to these lucrative crops.