India’s Agriculture Sector Under Liquidity Pressure: Working Capital Challenges from FY 2023–24 to FY 2025–26 and the Funding Imperative for FY 2026–27

CHENNAI, INDIA — 10 AUGUST 2026: India’s agriculture and allied sector has demonstrated resilience over the past three financial years, but businesses across the value chain have faced increasing pressure on working capital, procurement finance, inventory funding and receivables management.

The challenge is no longer limited to agricultural production. Manufacturers, processors, traders, exporters, cold-chain operators, agri-input companies, dairy businesses, fisheries enterprises, poultry companies and horticulture businesses must now manage increasingly complex cycles involving procurement, processing, quality control, storage, transportation, compliance, distribution and export realisation.

The Economic Survey 2025–26 notes that agriculture and allied activities contribute nearly one-fifth of India’s national income at current prices and account for approximately 46.1% of the country’s workforce. The Survey also highlights the increasing importance of higher-value allied sectors such as livestock, fisheries and horticulture. Economic Survey 2025–26

For businesses operating in this ecosystem, adequate working capital is becoming a strategic requirement rather than a routine banking facility.

FY 2023–24: Input Inflation, Uneven Supply and Cash-Flow Pressure

During FY 2023–24, agriculture-related businesses continued to operate in an environment marked by uneven weather conditions, commodity-price movements, higher logistics expenses and elevated input costs.

Manufacturers and processors faced pressure from the rising cost of raw materials, packaging, electricity, fuel, labour, transportation and storage. In several commodity segments, businesses had to make procurement payments quickly while sales realisation remained spread over a longer period.

For traders, the challenge was particularly significant because business models generally depend on high volumes, rapid inventory turnover and relatively narrow margins. Any delay in selling inventory or collecting receivables could affect the ability to fund the next procurement cycle.

Food processors also faced a mismatch between procurement and sales. Raw materials often had to be purchased during a limited harvest window, while finished products were sold gradually over several weeks or months. This required companies to maintain inventory for longer periods and carry additional holding costs.

Export-oriented businesses faced further challenges related to container availability, freight costs, foreign-exchange movements, international quality requirements and delayed payment realisation. Even where a company had an export order, working capital was required to finance procurement, processing, packaging, testing, documentation, inland transportation and shipment before payment was received.

The result was a growing demand for inventory funding, receivables finance, procurement facilities, short-term trade finance and non-asset-based working capital.

FY 2024–25: Growth Opportunities Increased Funding Requirements

FY 2024–25 brought stronger opportunities in value-added agriculture, food processing, horticulture, dairy, fisheries, branded products and agricultural exports. However, the expansion of opportunity also increased the financial requirements of operating businesses.

The Economic Survey 2025–26 reports that foodgrain production reached an estimated 3,577.3 lakh metric tonnes during Agriculture Year 2024–25. It also notes that horticulture production became an increasingly important component of agricultural output, with horticulture production exceeding foodgrain production in that period. Agriculture and Food Management, Economic Survey 2025–26

For companies, this created opportunities to invest in grading, sorting, packaging, cold storage, processing, branding and export-oriented product development. Yet these activities required capital before additional revenue could be generated.

Businesses expanding into processed and packaged products had to finance new machinery, product development, quality certification, inventory and marketing. Companies serving institutional buyers often faced extended credit periods, which increased receivable days and reduced the availability of internal funds.

The expansion of export opportunities also brought higher compliance requirements. Exporters needed to meet standards relating to traceability, residue testing, phytosanitary certification, packaging, labelling, cold-chain integrity and documentation. These requirements improved market credibility but increased the cost and time involved in fulfilling international orders.

APEDA data indicates that India’s agricultural exports reached approximately US$51.9 billion in 2024–25, including approximately US$28.6 billion of products covered by APEDA. Fresh fruits and vegetables alone accounted for approximately US$1.82 billion during the same period. APEDA Annual Report 2024–25 APEDA Fresh Fruits and Vegetables

This growth confirmed the strength of India’s agricultural export opportunity, but it also highlighted the need for better financial preparation across the sector.

FY 2025–26: Stronger Value Chains, Greater Volatility

During FY 2025–26, agriculture and allied businesses continued to benefit from domestic consumption, organised retail, food-processing demand and expanding international markets. The Economic Survey 2025–26 estimated agriculture and allied sector growth at 3.1% in FY 2025–26 and reported agricultural GVA growth of 3.6% in the first half of the year compared with 2.7% during the corresponding period of FY 2024–25. State of the Economy, Economic Survey 2025–26

However, positive sector-level growth did not eliminate business-level liquidity pressure. Companies continued to face volatility in procurement prices, feed costs, fertilisers, energy, packaging, freight, cold storage and imported components.

The year also reinforced the importance of allied sectors. Livestock, fisheries, aquaculture, poultry, dairy and horticulture became increasingly significant sources of value creation and income generation. The Economic Survey notes that livestock and fisheries have recorded strong long-term expansion, while also pointing to persistent issues such as feed and fodder shortages and related input-cost pressures.

A dairy business, for example, may require continuous working capital for feed, collection, chilling, processing, packaging and distribution. A poultry or fisheries company may face fluctuating feed prices, disease-control expenses, inventory risk and delayed payments from distributors. A horticulture exporter may need to fund procurement, sorting, packing, cold storage and shipment within a concentrated seasonal window.

In each case, profitability may exist on paper while liquidity remains under pressure.

The Five Major Working Capital Challenges
1. Seasonal Procurement Requirements

Agricultural procurement is frequently concentrated around harvest periods. Businesses need to secure raw materials within a limited window, often before market prices rise or supply becomes constrained.

A company that lacks adequate funds during this period may be forced to procure below its planned capacity, buy at higher prices later or lose access to reliable suppliers. This affects production continuity and can reduce the ability to serve confirmed customer orders.

2. Inventory Build-Up

Processors, traders and exporters may need to hold inventory to manage seasonal availability, price cycles, production requirements or customer commitments. Inventory may include grains, pulses, spices, fruits, vegetables, dairy inputs, feed, packaging materials and finished products.

While inventory supports business continuity, it also locks up capital. If prices decline or receivables are delayed, the company may face a longer cash-conversion cycle and reduced liquidity for further procurement.

3. Delayed Receivables

Payment delays from institutional customers, distributors, retail chains, food-service businesses and export buyers remain a major pressure point.

Receivables may be delayed because of quality approvals, documentation requirements, buyer reconciliation, shipment acceptance or extended commercial credit terms. A business may therefore have sales and profits recorded but insufficient cash available for suppliers, employees, logistics providers and routine operations.

4. Export and Import Cash-Flow Gaps

Exporters often spend money several weeks before receiving payment. The funding cycle may include raw-material procurement, processing, packaging, testing, certifications, inland transport, freight, insurance, port handling and shipment.

Import-dependent businesses face similar challenges when raw materials, equipment or ingredients must be paid for before production and sales revenue are realised. Currency movements can further affect the final cost and margin of the transaction.

5. Margin Pressure from Cost Fluctuations

Agriculture-related businesses generally have limited control over several operating costs. Commodity prices, feed, fertiliser, energy, packaging, labour, freight and storage expenses may change faster than selling prices.

Businesses operating under fixed-price contracts or supplying institutional buyers may be unable to immediately pass higher costs to customers. This creates margin pressure and increases the working capital required to complete the same order volume.

Why Traditional Funding Structures May Not Be Sufficient

Traditional bank finance remains important, but many agriculture-related companies do not fit easily into standard collateral-led lending structures.

A business may have strong transaction flows, established buyers, confirmed purchase orders and a viable repayment cycle, but limited fixed assets. Another company may have adequate collateral but require a facility that matches seasonal procurement or short-term export execution rather than a conventional long-term loan.

In several cases, funding applications are delayed because of incomplete documentation, weak financial presentation, high customer concentration, irregular banking patterns or a lack of clarity regarding the use and repayment of funds.

This makes the structure of the proposal as important as the requirement itself. Businesses need to explain how the facility will be used, how inventory will convert into sales, how receivables will be collected and how repayment will be managed.

Bespoke Financials’ Working Capital Solutions for FY 2026–27

Bespoke Financials works with Indian agriculture-related manufacturers, traders, processors, exporters and allied businesses to evaluate financial structures according to their commercial cycle.

The firm’s approach considers procurement timing, inventory requirements, order visibility, buyer quality, receivable ageing, financial performance, existing obligations, repayment capacity and growth plans.

Suitable facilities for FY 2026–27 may include:

Working Capital (Non-Asset-Based) – Up to ₹20 Cr: For businesses requiring liquidity for procurement, processing, inventory, operating expenses and receivable-cycle management without complete dependence on fixed-asset collateral.
Supply Chain Finance (No Collateral) – Up to ₹50 Cr: For supplier payments, procurement continuity and transaction-linked funding across eligible business relationships.
Export & Import Finance – Up to $5M: For agricultural exporters and importers managing procurement, production, shipment, freight, import commitments and overseas receivable cycles.
Agri Trade Finance: For agricultural commodities, perishables, food processors, agri-traders and businesses with seasonal procurement and sales cycles.
Procurement Facility – Bank Guarantee-backed, up to 270 days: For eligible businesses requiring structured procurement finance aligned with supplier terms and expected sales realisation.
Working Capital Against Negotiable Instruments – Up to ₹20 Cr: For short-term liquidity requirements against eligible negotiable instruments and defined commercial obligations.
Emerging Corporate Finance – Up to ₹15 Cr: For growing agriculture-related companies with established operations, increasing turnover and expanding institutional funding needs.
Traditional or Quick Capital: For urgent working-capital requirements, order execution, inventory buildup and business expansion.
Equity-Based Working Capital – ₹25 Cr and above: For larger companies requiring growth capital where conventional debt may not fully match the scale or structure of the requirement.
Flexible-Repayment Working Capital: For businesses requiring repayment structures linked to expected collections, inventory liquidation or defined operating cycles.
Asset Restructuring with Additional Working Capital Facilities from ₹10 Cr and above: For companies seeking to review existing obligations, restructure assets and create additional liquidity for operations and expansion.

The suitability of any facility depends on the company’s financial position, business model, documentation, transaction profile, repayment capacity and applicable credit assessment.

Financial Readiness as a Competitive Advantage

The experience of the past three financial years demonstrates that financial planning cannot begin only after a cash-flow gap appears.

Agriculture-related businesses should assess their funding requirements before the procurement season, before accepting large orders and before investing in processing or storage capacity. They should also monitor inventory days, receivable ageing, customer concentration, supplier payment cycles, export exposure, currency risks and existing debt obligations.

Businesses that maintain updated financial statements, GST records, banking data, stock information, order documentation and customer-level receivable details are better placed to present a credible funding proposal.

KPS Ghiri, Co-Founder of Bespoke Financials, said:

“Agriculture-related businesses require financing that understands the timing of their operations. The question is not simply how much funding a company needs, but when it needs the funds, how long the capital will remain deployed and how repayment will occur. A well-structured facility can help businesses procure at the right time, execute orders without interruption and build capacity with greater confidence.”

Bespoke Financials: Working Capital Specialists and Capital Architects

Established in 2016, Bespoke Financials supports entrepreneurs, MSMEs, SMEs, exporters, manufacturers, traders, emerging corporates and large enterprises across India.

The company positions itself as a strategic working-capital partner, offering customised solutions aligned with business operations, liquidity requirements and growth objectives. Bespoke Financials has served more than 4,500 businesses across India and has been recognised as an Award Winner of Excellence in Fintech Innovation in FY25.

Its approach is built around:

Sector-specific understanding.
Customised financial structuring.
Faster processing and responsive communication.
Flexible and non-asset-based funding options.
Alignment between business cycles and repayment structures.
Support for procurement, inventory, receivables, exports and expansion.
The Road Ahead

India’s agriculture and allied sector is moving towards a more integrated and value-added future. Growth opportunities are emerging in food processing, dairy, fisheries, horticulture, cold-chain logistics, branded agricultural products, organised aggregation, digital traceability and exports.

However, the capacity to capture these opportunities will depend on financial preparedness. Infrastructure, technology and market access can create potential, but working capital enables businesses to activate that potential.

For Indian agriculture-related companies, the next phase of competitiveness will be determined by their ability to connect sourcing, processing, storage, quality, logistics, finance and market access into one coordinated operating model.

Bespoke Financials invites agriculture manufacturers, processors, traders, exporters, agri-input businesses, dairy companies, fisheries enterprises, poultry companies, warehouse operators and allied businesses to evaluate their FY 2026–27 liquidity requirements in advance.