Coconut Promotion Scheme 2026: Strengthening India’s Coconut Sector Through Productivity

Policy Update
Manisha Kumari

Background

Coconut occupies a distinctive position in India’s agricultural economy. Often associated with coastal livelihoods, the crop supports farmers, processors, traders and a wide range of downstream industries. Its economic significance extends beyond the sale of fresh coconuts to products such as coconut oil, coconut water, milk, virgin coconut oil, desiccated coconut, activated carbon and coir-based products.

India is among the world’s leading coconut producers. According to the Government of India, around 30 million people, including nearly 10 million farmers, depend on the coconut sector for their livelihoods. In 2024-25, India produced around 13.97 million tonnes of coconut from approximately 2.19 million hectares, with average productivity of 6.36 tonnes per hectare. Coconut and coconut-based product exports were valued at ₹4,349.03 crore in 2024-25, registering a 25 per cent increase over the previous year.

However, the sector continues to face structural challenges. Earlier interventions focused largely on supporting coconut cultivation, production and farmer welfare, but productivity constraints such as ageing and senile plantations, limited adoption of improved planting material and inadequate farm-level management have persisted. This indicates the need for a more targeted approach that moves beyond expanding acreage towards rejuvenating plantations, improving productivity and strengthening value addition, thereby providing the rationale for the Coconut Promotion Scheme.

The Coconut Promotion Scheme, 2026

Against this backdrop, the Union Budget 2026–27 announced the Coconut Promotion Scheme as part of the Government’s broader focus on high-value agriculture. The Budget proposes the scheme to enhance competitiveness in coconut production by increasing production and productivity, including through the replacement of old and non-productive trees with new saplings, plants and improved varieties in major coconut-growing States.

The announcement is significant because it shifts policy attention towards the productivity constraints affecting established coconut-growing regions. However, the scheme’s detailed framework, including State/UT-wise allocation and utilisation, was still under formulation as of March 2026. Therefore, the Budget announcement should be distinguished from the scheme’s implementation: the replacement of old and non-productive trees with new saplings, plants and improved varieties represents the announced policy direction, while the specific operational guidelines and State/UT-wise implementation arrangements were yet to be finalised.

Rationale and Proposed Approach

The productivity challenge is closely connected to the age profile of India’s coconut plantations. In March 2026, the Union Agriculture Minister noted that many coconut plantations had become nearly 60 years old, contributing to declining productivity. Pest and disease pressures, including root wilt and whitefly, further affect production and farm incomes.

The challenge is therefore not simply one of producing more coconuts. It involves maintaining productive plantations over the long term.

The proposed focus on replacing old and unproductive palms can help address this structural problem. However, replanting must be accompanied by appropriate transition support because coconut is a perennial crop and newly planted palms require time before they generate comparable returns. Since newly planted coconut palms generally take several years to reach full bearing and generate stable returns, replanting can create a temporary income gap for farmers. Without adequate transition support during this gestation period, smallholders may hesitate to remove ageing but still income-generating palms

Major Intervention Areas

1. Rejuvenation of Ageing Plantations

Replanting and rejuvenation should remain at the core of the scheme. The Government has proposed phased replanting of senile and unproductive gardens, along with the expansion of coconut cultivation in suitable areas. The March 2026 stakeholder consultation identified ageing plantations, declining productivity and shortage of quality planting material among the sector’s major structural challenges.

The emphasis should therefore be on quality rather than merely increasing the number of palms. Disease-resistant, climate-suitable and high-performing varieties can improve productivity while strengthening resilience.

2. Quality Planting Material

Availability of quality seedlings is essential for successful rejuvenation. The Coconut Development Board has already been strengthening support for seedling production. Under revised cost norms announced in 2025, assistance for seedling production was increased from ₹8 to ₹45, while assistance under the Area Expansion Programme was raised from ₹6,500 to ₹56,000 per hectare.

The Coconut Promotion Scheme can build on these interventions by strengthening nurseries, ensuring quality certification and improving access to suitable planting material at the farmer level.

3. Intercropping and Farm Diversification

Productivity should not be measured only by coconut yield per hectare. Coconut-based farming systems can generate additional income through intercropping.

The Coconut Development Board’s Productivity Improvement through Coconut-Based Cropping System (PICCS) already promotes crops such as pepper, nutmeg, banana, ginger, vegetables and fruits alongside coconut. At present, PICCS is best viewed as an existing complementary initiative rather than a formally notified component of the Coconut Promotion Scheme. The new scheme could potentially build upon such established approaches, subject to the final operational framework. In 2025–26, the productivity improvement programme was being implemented across approximately 27,000 hectares nationally, including 8,300 hectares in Kerala benefiting about 33,250 farmers.

Such models can improve land-use efficiency and provide farmers with diversified income, particularly during periods of fluctuating coconut prices. However, the scope for intercropping is not uniform across all major coconut-growing regions, as it depends on factors such as soil conditions, rainfall, available moisture, plantation spacing and the suitability of intercrops to local agro-climatic conditions.

4. Crop Health and Climate Resilience

Productivity enhancement cannot be separated from crop health. Root wilt, whitefly and other pest and disease pressures can substantially reduce yields. The proposed scheme therefore envisages holistic crop-health management alongside the production of quality seedlings and plantation rejuvenation.

Going forward, greater integration of agricultural research, disease surveillance, farmer advisories and climate-resilient varieties will be essential. State agricultural universities, ICAR institutions and the Coconut Development Board can play a stronger role in translating research into farm-level practices.

5. From Production to Value Addition

Increasing productivity alone will not automatically translate into higher farmer incomes. A stronger coconut economy requires better processing and marketing infrastructure.

The Government’s proposed approach includes integrated coconut processing units to strengthen value addition and exports. This is particularly relevant as India’s coconut exports have expanded beyond traditional products towards coconut water, virgin coconut oil, coconut milk and other value-added products.

Greater participation of Farmer Producer Organisations (FPOs), cooperatives and women-led enterprises can help farmers move higher up the value chain instead of remaining primarily suppliers of raw produce.

Key Challenges

Ageing plantations: A significant share of India’s coconut palms are old and increasingly less productive. Replanting ageing palms is necessary to restore productivity, but newly planted palms take several years to become productive, creating a temporary income gap for farmers

Pests and diseases: Diseases such as root-wilt and pests such as whitefly can reduce coconut yields and weaken plantation health. Limited access to timely disease surveillance, preventive measures and effective farm-level management can further increase productivity losses.

Shortage of quality planting material:Large-scale rejuvenation requires adequate availability of healthy, high-yielding and disease-resistant planting material. Limited access to quality seedlings can delay replanting and reduce the effectiveness of efforts to improve plantation productivity

Small and fragmented holdings: Many coconut farmers operate on small or fragmented plots, which can make the adoption of modern irrigation, mechanisation and scientific nutrient management difficult and costly. Such constraints can limit economies of scale and reduce the scope for productivity-enhancing investments.

Price volatility: .Higher production does not necessarily translate into higher and stable farmer incomes because coconut prices can fluctuate due to changes in supply, demand and market conditions. Farmers therefore remain vulnerable to income uncertainty even when productivity improves.

Limited value addition: : A substantial opportunity exists to increase farmer incomes through processing and value-added coconut products. However, inadequate processing facilities, branding, quality certification and market linkages can prevent farmers and producer organisations from capturing a larger share of the value generated across the coconut value chain

Impact

First, Higher productivity: Replacing old and unproductive palms and promoting improved planting material is expected to increase coconut production and productivity over the longer term.

Second, Higher farmer incomes: Improved yields, intercropping and greater value addition may contribute to higher and more diversified farmer incomes. However, the extent of income gains will depend on market prices, adoption and the effectiveness of implementation.

Third, Greater climate resilience: Plantation rejuvenation and improved crop-health practices are expected to strengthen the resilience of coconut farming to climate and disease-related risks.

Fourth, More rural employment: Expansion of processing, value addition and coconut-based enterprises may contribute to additional employment opportunities in rural areas.

Fifth, Stronger value chains: Better processing, branding, quality standards and market linkages could help farmers and producer organisations capture a larger share of the coconut value chain.

Sixth, Higher export potential: Improved quality, processing and value-added products may strengthen India’s competitiveness in global coconut markets.

Seventh, Sustainable sector growth: A combination of productivity enhancement, plantation rejuvenation, diversification and value addition is expected to support the long-term sustainability and competitiveness of India’s coconut sector.

Way Forward

1. Rejuvenate ageing plantations: The Coconut Development Board (CDB), in coordination with State Agriculture/Horticulture Departments, should identify senile and low-productivity plantations and implement phased replanting with high-yielding and disease-resistant planting material. Transition support should be provided during the gestation period of newly planted palms to reduce farmers’ income losses.

2. Ensure quality planting material: The CDB, ICAR institutions and State agricultural universities should strengthen certified nurseries, improve the availability of quality seedlings and establish quality standards for planting material. Nursery capacity should be expanded in major coconut-growing regions to support large-scale plantation rejuvenation.

3. Strengthen crop-health management: State Agriculture Departments, ICAR institutions and extension agencies should establish stronger disease surveillance and early-warning systems for major pests and diseases such as root-wilt and whitefly. Regular farmer advisories, field demonstrations and integrated pest and disease-management practices should be expanded.

4. Promote climate-smart cultivation: State Agriculture/Horticulture Departments and agricultural universities should promote micro-irrigation, soil-moisture conservation, scientific nutrient management and climate-resilient cultivation practices. Region-specific advisories should be developed according to local rainfall, soil and water conditions.

5. Promote region-specific intercropping: CDB and State Agriculture Departments should identify suitable intercrops according to local agro-climatic conditions, plantation spacing, soil and water availability. Farmer demonstrations and technical guidance should be provided in regions where coconut-based intercropping is economically and agronomically feasible.

6. Strengthen FPOs and digital market linkages: CDB, State governments and Farmer Producer Organisations (FPOs) should facilitate collective procurement, processing and marketing. Digital market platforms, traceability systems and better access to market information should be promoted to improve price discovery, transparency and export competitiveness.

7. Expand value addition and processing: CDB, State governments and FPOs should support decentralised processing facilities for coconut oil, coconut water, coconut milk and other value-added products. Training in quality standards, packaging, branding and certification should help producers access higher-value domestic and export markets.

8. Address price volatility: CDB and relevant State marketing agencies should strengthen market intelligence and provide farmers and FPOs with timely information on prices and demand. Greater aggregation, storage, processing and value addition should be encouraged so that farmers are less dependent on distress sales of raw coconuts during periods of low prices.

9. Strengthen implementation and monitoring: The Ministry of Agriculture & Farmers Welfare, CDB and State/UT governments should establish clear implementation guidelines, State/UT-wise targets, funding arrangements and measurable indicators for plantation rejuvenation, productivity, farmer incomes and value addition. Progress should be reviewed periodically once the scheme becomes operational.

Conclusion

The Coconut Promotion Scheme 2026 represents an important shift from simply expanding coconut cultivation towards rejuvenating India’s existing production base and strengthening the entire coconut value chain. Its success will depend not only on replacing old trees but also on ensuring quality planting material, scientific crop management, farmer support, processing infrastructure and reliable markets.With nearly 30 million people dependent on the sector, productivity enhancement has implications far beyond agricultural output.

A coordinated approach combining rejuvenation, resilience, diversification and value addition can help transform India’s existing strength in coconut production into higher and more sustainable farmer incomes. The long-term success of the Coconut Promotion Scheme will, however, depend on effective implementation, adequate and timely funding, and continuous monitoring once the operational guidelines and State/UT-wise implementation framework are finalised.

References

Ministry of Finance, Government of India — Union Budget 2026–27, Budget Speech

https://www.indiabudget.gov.in/doc/budget_speech.pdf

PIB — Union Budget 2026–27: Coconut Promotion Scheme

https://www.pib.gov.in/PressReleasePage.aspx?PRID=2221410

PIB — India Leads Global Coconut Production; Government Announces Coconut Promotion Scheme

https://www.pib.gov.in/PressReleasePage.aspx?PRID=2241416

PIB — National Stakeholders’ Meet on Coconut Promotion Scheme

https://www.pib.gov.in/PressReleasePage.aspx?PRID=2236048

PIB — Post-Budget Discussion with Coconut Farmers and Stakeholders

https://www.pib.gov.in/PressReleasePage.aspx?PRID=2236410

PIB — Accelerating India’s High Value Crop Diversification

https://www.pib.gov.in/PressReleasePage.aspx?PRID=2253483

Ministry of Agriculture & Farmers Welfare

https://www.indiabudget.gov.in/doc/eb/sbe1.pdf

About the Contributor

Manisha Kumari is a Research and Editorial Intern at the Impact and Policy Research Institute (IMPRI) and a B.A Liberal Studies (Major Public Policy) graduate from Jagran Lakecity University ,Bhopal . Her research interests lie in public policy , governance , sustainable development ,social justice , and evidence based policymaking with a particular focus on analysing government policies and programmes to assess their effectiveness and contribution to inclusive and sustainable development.