The agricultural sector in India is a vital component of the economy and contributes to multiple impacts of climate change, affecting the nation’s macroeconomic stability. The paper investigates the potential impact of climate change on agricultural productivity and assesses the subsequent effects on macroeconomic parameters such as GDP, inflation, unemployment rate and trade balances. This paper outlines the current challenges faced by Indian agriculture with reference to the increased variability in temperature, shifting rainfall patterns and the increase in erratic weather events. The codependency between agriculture and climate change is discussed and the Cobb–Douglas production function model was used to investigate how these climatic changes can reshape economic outputs, in terms of short-term disruptions and long-term adaptations. The research also explores the direct economic impacts and offers actionable insights that can guide responsible parties to frame appropriate policies to drive the community towards climate-smart agriculture.