Farm forestry was promoted in India in the late 1970s to produce fuelwood for rural consumption. The program was immensly successful in the green revolution region in the early 1980s, but farmers produced wood for markets, and not to meet local needs. This market orientation of farmers was recognized in the new National Forest Policy of 1988. Lately, two serious problems have been noted. First, the program remained confined only to the commercialized and monetized regions, and elsewhere made little impact. Second, even in regions where it was successful in the early 1980s, it could not be sustained after 1986. This paper, analyzes the likely causes for its limited success and suggests that while market-led farm forestry may continue without subsidies on a reduced scale, government attention should shift to strengthening the traditional agroforestry practice based on indigenous species.