Centre plans ₹2,000 crore horticulture clusters to tame food inflation
The five-year, central government scheme will develop fruit and vegetable clusters near major cities to cut supply-chain costs, reduce post-harvest losses and improve farmers' market access.
New Delhi: The Centre is preparing to roll out a ₹2,000 crore scheme to develop horticulture clusters for fruits and vegetables within a 100-km radius of major consumption centres, betting that shorter supply chains will help curb food inflation while improving farmers' incomes, according to two people aware of the development.
The government has finalized the scheme guidelines and recently held a pre-bid meeting with interested stakeholders. The proposed Peri-Urban Vegetable Clusters, a five-year central sector scheme, will allow private players, farmer producer organizations (FPOs) and cooperatives to develop the clusters, the people said.
The initiative aims to improve the availability of perishable produce by shortening supply chains, reducing transportation costs and cutting post-harvest losses. Vegetables and pulses account for 6.82% of the Consumer Price Index (CPI 2024), while fruits and nuts carry a weight of 3.70%, making supply disruptions in these categories a key driver of food inflation.
India's headline inflation accelerated to an 18-month high of 4.4% in June, rising 50 basis points from the previous month as food inflation surprised on the upside.
The scheme will be rolled out in phases. The first phase will cover state capitals and cities with populations of 1.5 million or more, based on the 2011 Census. The second will extend to cities with populations exceeding 1 million, followed by cities with populations of up to 1 million, according to one of the two people cited above.
The supply chain gap
“It is a win-win for both farmers and consumers…Bringing production centres closer to consumption centres will reduce post-harvest losses and freight costs, improve demand-linked production, and ensure consumers get fresher produce while farmers realise better returns,” said Shweta Saini, agriculture economist and founder and chief executive of Delhi-based Arcus Policy Research.
The government expects the cluster-based approach to strengthen farm-to-market linkages, improve logistics, moderate seasonal price volatility and expand farmers' market access.
Responding to emailed queries, the Ministry of Agriculture and Farmers Welfare said: "The scheme will comprehensively address farmer's issues pertaining to poor realization of prices through multiple interventions including but not limited to the promotion of good agricultural practices (GAPs), facilitating the availability of quality planting material of new and improved cultivars, incentivising the use of modern technologies including IoT (Internet of Things), Traceability solutions, precision farming and others."
Production rise expected
Horticulture production is projected to have hit 377.77 million tonnes in 2025-26, up by 7 million tonnes from 2024-25, according to the ministry's second advance estimates released on 11 June. Fruit production is expected to rise from 117.6 million tonnes to 121.4 million tonnes, led by higher output of banana, mango, papaya, apple and guava. Vegetable production is projected to increase from 217.8 million tonnes to 221 million tonnes.
“This increased level of fruit and vegetable production has unfortunately not been matched by developments in supply chain management. This inefficiency in the supply chain has resulted in extreme price volatility in the retail price of fruits and vegetables, especially in urban centres such as Delhi-NCR, Mumbai, Kolkata, Bengaluru, Hyderabad, Pune and Chennai. This has been more pronounced in the case of vegetables and especially tomato, potato and onion prices,” the second person said.
High logistics costs and inefficient supply chains remain a key bottleneck.
"For fruits and vegetables, logistics account for 15-20% of the total input cost because production centres are often located far from consumption markets. Supply chain inefficiencies also lead to significant wastage, as agricultural output is not as predictable as manufacturing," said S.P. Singh, senior fellow at IFTRT (Indian Foundation of Transport Research and Training), a Delhi-based transport research organization.
Price volatility is driven by seasonal production, the perishable nature of fruits and vegetables, inadequate crop planning, and limited cold-chain and controlled-atmosphere storage infrastructure. Addressing these challenges requires a more efficient and integrated supply chain, Saini added.
About the Author
Vijay C. Roy is a journalist with over 21 years of experience covering various news beats across different organisations such as Business Standard and The Tribune. In the past, he has covered beats such as finance, auto, MSME, commodities, FMCG, pharmaceutical, agriculture, IT/ITES, infrastructure and start-ups. He joined Mint in February 2025, and covers agriculture, food processing, fertilizers, environment and climate change, bringing over two decades of experience reporting on farm policy, food inflation, crop trade, and rural livelihoods.<br><br>Vijay’s areas of reporting include food security and climate change policies, focusing on their impact on different stakeholders and their implications. His expertise lies in simplifying complex agri-economic issues such as edible oil import dependence, cotton and wheat trends, fertiliser subsidies, and climate-related risks. He has covered key developments including global supply disruptions and evolving trade policies, offering both macroeconomic perspective and field-level context. Known for his credible and balanced reporting, he follows a rigorous, fact-based approach that prioritises accuracy and context. He is driven by a commitment to public interest, aiming to make critical agricultural and economic issues accessible while contributing to informed policy and industry discussions.
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