In a move that formalizes the intersection of Big Tech and regenerative agriculture, Microsoft has signed a landmark offtake agreement with the Indian climate-tech firm Varaha to purchase over 100,000 tons of carbon dioxide removal (CDR) credits. Announced in early 2026, the deal leverages Microsoft’s AI infrastructure to transform the economics of smallholder cotton farming across Maharashtra and Rajasthan.
Biochar integration and carbon monetization
The partnership centers on the deployment of 18 industrial biomass gasification reactors that convert cotton stalks - traditionally agricultural waste often disposed of via open-field burning—into biochar. This charcoal-like substance serves as a stable carbon sink, locking biogenic carbon into the soil for centuries. For India’s textile sector, which contributes to nearly 25 per cent of the world's cotton production, this creates a dual-revenue stream. Farmers now receive direct payments for their biomass while benefiting from the enhanced soil moisture retention and reduced fertilizer requirements that biochar application provides.
AI-enabled supply chain traceability
Beyond carbon sequestration, the initiative utilizes Microsoft’s Azure Data Manager for Agriculture to provide high-fidelity traceability. By using satellite imagery and machine learning to verify regenerative practices at the field level, the project ensures that the resulting fiber meets the ‘contamination-free’ and ‘traceable’ standards required by global luxury retailers. This technical scaffolding is essential as the industry navigates a 3 per cent yield drop caused by uneven monsoons in the 2025/26 season. High-integrity carbon removal is now a material catalyst for rural economic resilience, states Madhur Jain, CEO, Varaha. By monetizing environmental stewardship, the deal offers a buffer against the volatility of global cotton prices, which currently sit 16 per cent below government support levels.
Varaha is a leading South Asian climate-tech developer specializing in nature-based carbon removal. Operating across India, Nepal, and Bangladesh, the firm connects over 45,000 smallholder farmers to global carbon markets. Through its proprietary tech stack, Varaha focuses on biochar, agroforestry, and regenerative cotton, aiming to remove 2 million tons of CO2 over the next decade while boosting farm-level profitability.
