Cabinet approves ₹2.6 trillion kharif MSP outlay, energy security measures

Amid heightened global volatility and supply chain disruptions due to the West Asia war, the Union cabinet on Wednesday cleared a series of proposals to support India’s food and energy security, including higher minimum support prices (MSPs) for key kharif crops and a coal gasification incentive scheme to reduce dependence on imported fuel.

The cabinet approved higher MSPs for 14 kharif crops, including paddy and maize, for the 2026-27 marketing season, with an outlay of ₹2.6 trillion.

It also cleared a ₹36,500 crore coal gasification scheme, a semi-high-speed double railway line connecting Sankhej to Dholera in Gujarat, and the upgrade of Nagpur International Airport. Together, the decisions entail a total outlay of about ₹3.18 trillion.

The MSP for common paddy, the main kharif crop, was raised by ₹72 to ₹2,441 per quintal for the 2026-27 season, while Grade A paddy MSP was increased by the same amount to ₹2,461 per quintal.

Among pulses, MSP for tur (arhar) was increased by ₹450 to ₹8,450 per quintal, while urad MSP was raised by ₹400 to ₹8,200 per quintal. Moong saw only a marginal increase of ₹12 to ₹8,780 per quintal.

In oilseeds and cotton, sunflower seed saw the highest absolute increase of ₹622 per quintal, followed by cotton (medium and long staple) at ₹557, nigerseed at ₹515 and sesamum at ₹500. Following the revision, sunflower seed MSP was fixed at ₹8,343 per quintal, while cotton MSP was set at ₹8,267 for medium staple and ₹8,667 for long staple varieties. Nigerseed MSP was raised to ₹10,052 per quintal and sesamum to ₹10,346 per quintal.

For other oilseeds, soybean MSP was raised by ₹380 to ₹5,708 per quintal, while groundnut MSP was increased by ₹354 to ₹7,517 per quintal.

The announcement comes ahead of the kharif sowing season, with forecasts pointing to above-normal summer temperatures and the possibility of a below-normal monsoon.

Experts said the sharper hikes for sunflower, sesamum and soybean reflect concerns over India’s heavy reliance on edible oil imports, while higher MSP support for pulses is aimed at sustaining acreage expansion and limiting domestic price volatility.

“A sustainable edible oil economy requires a balanced approach that protects farmer remuneration while also safeguarding consumer affordability. MSP support plays a critical role in strengthening farmer confidence and encouraging crop diversification towards oilseeds,” said Sudhakar Desai, president, Indian Vegetable Oil Producers’ Association (IVPA), a trade body representing India’s edible oil and oilseed value chain.

The synthetic gas produced through coal gasification would be used in fertiliser production and reduce natural gas imports. Under the scheme, financial incentives of maximum 20% of plant and machinery costs will be provided to beneficiaries selected through a competitive bidding process.

“The scheme will support the gasification of around 75 million tonnes of coal/lignite and accelerate India’s 100 MT (million tonne) coal gasification mission, while reducing import dependence on LNG, fertilisers, methanol and other critical industrial inputs,” Union coal minister G, Kishan Reddy said in a post on X. "Expected to mobilise ₹2.5–3 lakh crore in investments and generate around 50,000 jobs, the initiative will also promote indigenous technologies and strengthen India’s domestic gasification ecosystem."

The move comes at a time when 20% of global gas supplies have come to a near-halt since the start of the US and Israel's war on Iran on 28 February, and the subsequent blockade of the Strait of Hormuz.

“The success of this programme will depend on execution discipline,” said Atanu Mukherjee, chief executive of Dastur Energy, a Texas-based energy technology company said. "The right gasification technology must be matched to the right coal. Indian coal is high-ash and has very different characteristics from coal used in many global gasification systems. Therefore, technology selection, coal chemistry, project scale, downstream integration, financing structure and carbon management will determine whether these projects become commercially bankable."