An inverted duty structure, long gestation periods and significant upfront investment requirements are limiting the growth
Structural bottlenecks, economic constraints, import dependency and high-entry barriers for farmers are hurting the Indian cocoa industry. A report has shown that an inverted duty structure that favours imports of finished cocoa products over raw beans is discouraging domestic value addition and long gestation periods and significant upfront investment requirements are limiting the growth.
Despite rising domestic demand, the country currently meets only 25 to 30 per cent of its cocoa requirements through domestic production, with imports exceeding USD 866 million annually. A knowledge paper by the Federation of Indian Chambers of Commerce and Industry (Ficci) and Grant Thornton Bharat revealed that India continues to import substantial volumes of processed cocoa products, primarily cocoa powder, butter, and paste, to meet domestic demand.
Trade data reveals significant negative net flows across all categories, with cocoa powder alone accounting for over 55,000 MT in deficit. India’s cocoa processing infrastructure has an installed grinding capacity of nearly around 99,500 MT per year, yet only around 61 per cent of this capacity is currently utilised with an idle processing capacity of approximately around 39,000 MT, as per the report.
“Constraints such as limited availability of quality planting material, absence of region-specific climate resilient varieties and standardised fermentation and drying protocols; inadequate research and extension support, gaps in post-harvest infrastructure and fragmented institutional coordination have slowed adoption and productivity growth,” Prabhat Kumar, Horticulture Commissioner, Department of Agriculture and Farmer Welfare, highlighted in the report.
Structural Challenges
India’s cocoa industry is constrained by an inverted duty structure, where raw material i.e. cocoa beans attract higher import duties than finished products, making domestic value addition economically unviable. Out of the total imports, 95 per cent are brought in duty-free under free trade agreements, while the remaining 5 per cent is sourced from non-FTA countries such as Ivory Coast, Ghana, Ecuador, Brazil, Nigeria, and Colombia, the report added. These imports are majorly the finished goods and not the raw materials.
“It is cheaper to import finished cocoa products than to import raw cocoa beans and process them domestically, due to this structure. This discourages local value addition and makes cocoa processed in India more expensive,” the report pointed out.
India also lacks the systems required to position its cocoa products competitively in global markets. The absence of robust quality standards, traceability mechanisms, and certification frameworks limits access to premium export segments.
“Targeted efforts are required to address structural gaps. Priority areas include strengthening the supply of quality planting material, establishing a dedicated cocoa R&D framework for region-specific and climate-resilient varieties, improving adoption of good agricultural practices and standardising post-harvest processes such as fermentation and drying,” Chirag Jain, Partner and Food Processing Industry Leader, Grant Thornton Bharat, pointed out in the report.
State Of Cocoa In India
Cocoa cultivation in India is steadily gaining ground, driven by the rising demand for chocolate and cocoa-based products across both domestic and international markets. As of FY24, India cultivated cocoa across approximately 1,11,000 hectare producing around 30,390 metric tonne which comes from southern states of Andhra Pradesh, Kerala, Karnataka and Tamil Nadu with Andhra Pradesh alone contributing around 40 per cent of this national output.
However, this accounts for less than 20 per cent of the domestic demand which stands at nearly 1.87 lakh MT (in bean equivalents). The report added that India’s chocolate consumption is on the rise while domestic cocoa production remains insufficient, creating a clear demand-supply gap. The report pointed out that there are three main varieties of cocoa recognised globally and cultivated in India, which include Criollos, Forasteros and Trinitarios.
With a cultivated area of 44.9 thousand hectare and annual production of 12.38 thousand metric tonne, Andhra Pradesh holds the distinction of being India’s largest cocoa producer, contributing approximately 40 per cent of the nation’s total cocoa bean output. With 99% per cent of its area under production being rainfed and average land holding of around one acre, Kerala ranks second in cocoa production nationwide, with an output of 10.75 thousand metric tonne.
National Mission For Cocoa
The paper has recommended bringing a national mission on Cocoa to unify efforts across research, policy and trade. Ficci-GT Bharat have called for expanding polyclonal seed gardens to 250 hectare by 2028, with a focus on tribal and rainfed regions.
Key interventions include expanding polyclonal seed gardens to meet demand for planting materials, establishing a Centre of Excellence (CoE) through a public-private partnership model, and digitising the cocoa value chain to enable traceability, farmer profiling and targeted subsidy delivery.
Rationalising import duties and promoting cocoa cultivation in tribal and rainfed zones are also critical to reducing import dependency and boosting farmer incomes. The report added that a cocoa stewardship forum is proposed as a vital mechanism to ensure coordinated action between government, industry and academia. This platform would facilitate policy alignment, drive innovation, and promote sustainability across the value chain, while empowering farmers through capacity building and knowledge dissemination.
“We believe that with the right policy support, institutional mechanisms and stakeholder collaboration, cocoa can transition from a niche crop to a strategic pillar of India’s agricultural economy, enhancing rural livelihoods, reducing import dependency, and strengthening India’s footprint in global cocoa markets,” Syed Junaid Altaf, Chairman, Ficci Task Force on Horticulture, noted in the report.
On the policy front, the report emphasised that current subsidy support covers only a limited share (around 30 to 40 per cent) of the overall cost of cocoa cultivation, leaving farmers to bear substantial up-front investment. This financial burden is heightened by the long gestation period before income generation, particularly under monocropping systems, alongside rising input and labour costs and growing climate-related risks.
To incentivise farmer adoption and accelerate area expansion, the report recommended that subsidy support must be strengthened and front loaded to cover at least 50 per cent of cultivation costs, given prevailing financial pressures arising from high upfront costs, rising input and labour expenses, and significant investment requirements for irrigation, planting material, and on farm equipment etc.
While structural challenges remain, through strategic and collaborative efforts, cocoa can evolve from a niche intercrop into a strategic commodity, making meaningful contributions to India’s agricultural transformation.
