India’s shift towards higher-value crops is creating greater demand for organised price discovery and risk management, with spices and oilseeds emerging as key drivers of agricultural growth.

The findings are from the MCX report, “Harvesting Value: India’s Agricultural Commodity Markets,” launched through Global Commodity Conclave (GCC). The report examines the changing composition of India’s agricultural economy and the role of derivatives in supporting farmers, processors, traders and exporters.

Spices and oilseeds lead agricultural growth

Spices recorded the strongest production growth among the crop categories covered in the report. Production rose from 6.99 million metric tonnes (MMT) in 2015-16 to 12.99 MMT in 2024-25, an increase of 85.9%. Production is projected to touch 18.12 MMT by 2029-30, growing at a forecast CAGR of 6.87%.

High value spice has seen growth across the board. The production of Ajwain has increased more than 3 times during 2015-16 and 2024-25. Ginger has registered a CAGR of 9.12%, cumin 8.75% and garlic 8.23%.

Oilseeds have also grown strongly. 25.25 MMT in 2015-16 increased to 42.99 MMT in 2024-25 showing cumulative growth of 70.2%. The segment grew at a CAGR of 5.46%, the second highest growth rate among the eight segments analysed. Oilseed production is projected to touch around 56.7 MMT by 2029-30.

Among major oilseeds, rapeseed and mustard led the growth with production rising 86.4% to 12.67 MMT. Soybean and groundnut production increased 78.2% and 77.4%, respectively. Together, groundnut, rapeseed and mustard, and soybean accounted for 95% of the oilseed sector’s INR 2,135.3 billion economic output in 2023-24.

The report notes that India’s agricultural growth is increasingly being driven by “high-value commodities, such as spices and oilseeds”, creating opportunities for market-based risk management, value addition and organised trading.

Derivatives can strengthen price discovery

The changing crop mix is increasing the importance of efficient market mechanisms as production, consumption and trade expand. The report describes a well-functioning agricultural derivatives market as an “essential component of agricultural market infrastructure”, supporting price discovery, risk management, market transparency and economic development.

Futures markets bring together information from producers, processors, traders and investors to generate transparent, forward-looking price signals. The signals can aid decisions regarding production, procurement, storage and marketing. Hedging is a useful tool for participants to deal with price volatility as well as income uncertainty.

The report notes that futures prices lead spot prices for many Indian agricultural commodities, making them useful reference points for physical transactions. These forward-looking price signals can also help market participants decide whether to sell immediately or hold produce for later sale.

The report also emphasises the role of digital warehousing and electronic warehouse receipts in linking physical commodities to finance. By linking warehousing, financing, physical trade and futures markets, the system can improve transparency and support more effective price discovery and risk management across the agricultural value chain.

Significant room for expansion

India’s agricultural derivatives ecosystem has substantial scope to broaden alongside the growth in commercially important crops. Of the 117 major agricultural commodities identified under the Ministry of Agriculture’s classification, 11, or about 9%, currently have active exchange-traded derivative contracts.

MCX’s agricultural portfolio includes Cardamom, Cotton, Cotton Seed Wash Oil, Kapas and Mentha Oil, covering products across spices, fibre, raw cotton and oilseed-linked categories.

MCX announced introduction of futures contracts on Crude Sunflower Oil, expanding exchange-traded risk-management avenues for participants across India’s edible oil value chain. This move will further strengthen price discovery and risk management across India’s edible oil market.

The report notes that expanding commodity coverage, digital warehousing, improved physical market infrastructure, greater institutional participation and consistent regulatory support are areas that can help deepen the agricultural derivatives ecosystem. Reforms such as reclassifying commodities, raising position limits at the client level, phasing in physical settlement and broadening participation by financial institutions could improve liquidity and hedging efficiency.

The opportunity extends beyond derivatives trading. A stronger agricultural market infrastructure can connect price discovery, risk management, warehousing, financing and physical trade, supporting more efficient supply chains, access to working capital and greater income resilience.

As the report puts it, a vibrant agricultural derivatives market can function as “connective economic infrastructure”, with the potential to support deeper financial market participation, more resilient rural incomes and a stronger position for India in global commodity markets.