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The organic food industry in India is in the early stages of growth. Higher disposable income and greater health awareness have resulted in an increased domestic demand for organic food. There is huge premium in selling organic products, not only to export markets but also to affluent, health conscious domestic consumers. India is endowed with an abundance of labour and has diverse agroclimatic region that is well suited to year round agriculture. It still has strong traditional agricultural practices. Can India make use of this comparative advantage to introduce sustainable agriculture practices and at the same time improve incomes of small and marginal farmers?On the supply side, small and marginal farmers realize that there is an opportunity to get higher net incomes even if yields are low in organic agriculture. This is because the price of pesticides and chemicals has increased significantly over the last few decades resulting in a significant increase in the cost of production. Organic farming cost could be 50% to 60% less when compared to inorganic farming practices.In addition to domestic demand side, globalized markets provide significant opportunities for Indian agriculture to capture a larger share of the global demand for organic food. This paper analyzes the growth of the organic food industry in relation to domestic and export demand. We also look at the supply side to determine if organic farming and sustainable agricultural practices could help improve farmers’ income. Finally, this paper analyses existing policy framework towards organic agriculture and how small and marginal farmers could possibly benefit in this niche market.