India’s First Carbon Credit Payments Reach 2,500 Farmers in Punjab and Haryana

In a landmark development for Indian agriculture, farmers have received carbon credit payments for the first time for adopting improved and climate-friendly farming practices. Around 2,500 farmers — approximately 1,400 from Punjab and the rest from Haryana — have become the initial beneficiaries of this initiative. The total payout stands at about Rs 2.5 crore, marking a significant shift toward rewarding sustainable agriculture through verified environmental outcomes.

How the Payments Work

Unlike traditional subsidies linked to landholding size, these payments are based strictly on verified carbon credits generated by each farmer’s fields. The first set of credits covers thousands of acres and exceeds 50,000 carbon credits. Individual farmers received amounts ranging from roughly Rs 3,000 to Rs 15,000, depending on the volume of credits attributed to their practices. The money was transferred digitally, ensuring transparency and traceability.

The credits stem from activities carried out between 2019 and 2022 under the Aadi programme run by Grow Indigo, a joint venture between Indian seed company Mahyco and US-based Indigo Ag. The programme received technical guidance from the Indian Council of Agricultural Research (ICAR). It is the first flagship farmer-carbon initiative in India to issue agricultural carbon credits under the internationally recognised Verra VM0042 methodology.

Payments were released from Grow Indigo’s own funds ahead of the complete sale of the credits. Under the arrangement, farmers are entitled to 75 per cent of the net revenue generated from the sale of these credits. An event at Punjab Agricultural University in Ludhiana, attended by ICAR Director General M.L. Jat, formally initiated the direct benefit transfers.

Practices That Generated the Credits

Participating farmers adopted regenerative and climate-smart methods that reduce greenhouse gas emissions and increase soil carbon storage. Key practices included direct-seeded rice instead of traditional transplanting, reduced tillage, improved crop-residue management to minimise stubble burning, and more efficient fertiliser use.

These changes deliver multiple benefits beyond carbon. Direct-seeded rice significantly lowers water consumption compared with conventional methods. Better residue management keeps large volumes of crop residue out of open fires, improving air quality. Efficient nutrient management reduces nitrous oxide emissions while supporting soil health.

Measurable Environmental Gains

Data from the participating fields for the 2019–2022 period highlight the scale of impact. The practices are estimated to have saved around 45 billion litres of water. More than two lakh tonnes of crop residue were prevented from being burned, avoiding approximately 1,000 tonnes of PM2.5 emissions — a major air pollutant that affects both rural and urban populations in the region.

These outcomes demonstrate that climate-friendly farming can simultaneously address water scarcity, air pollution, and soil degradation while creating a new income stream for farmers.

Why This Milestone Matters

Agriculture in Punjab and Haryana has long faced challenges related to intensive rice-wheat systems, groundwater depletion, and seasonal stubble burning. Carbon markets offer a market-based mechanism to reward farmers who shift toward more sustainable methods. By linking payments to verified results rather than mere participation or land size, the model incentivises genuine practice change and measurable environmental improvement.

The initiative also brings smallholder farmers into the global voluntary carbon market. Until now, agricultural carbon credits in India remained largely at the discussion or pilot stage. The successful verification, issuance, and payout under a rigorous international standard establish a workable pathway for scaling similar efforts across other crops and regions.

Looking Ahead

Farmers who joined the programme after 2022 are currently under monitoring and audit. They will receive payments in subsequent cycles once their credits are verified and issued. Grow Indigo has set an ambitious target of generating one million carbon credits annually by 2027 and expanding the programme’s footprint substantially.

For individual farmers, the additional income — even in the range of a few thousand rupees per season — provides meaningful support amid rising input costs. Over time, consistent participation can improve soil fertility, lower water and fertiliser requirements, and enhance long-term farm resilience.

Broader Implications for Indian Agriculture

This first round of payments signals the practical arrival of soil carbon markets in India. It shows that with proper measurement, independent verification, and transparent revenue sharing, farmers can be compensated for the public environmental services their fields provide. The involvement of scientific institutions such as ICAR in developing protocols for greenhouse-gas accounting, soil sampling, and remote sensing adds credibility and replicability.

As climate pressures intensify and the demand for high-quality carbon credits grows globally, programmes like Aadi can help align farmer incomes with national and international sustainability goals. Success will depend on continued rigorous verification, fair revenue sharing, and expansion that remains accessible to small and marginal farmers.

The experience of these 2,500 farmers in Punjab and Haryana offers a concrete example that good agricultural practices can yield a dual harvest — better environmental outcomes and a new source of earnings. It represents an important step toward making Indian farming both more productive and more climate-resilient.

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