Remote sensing data from Indian geostationary satellites (Kalapana-1, INSAT 3A) were used for the first time for early warning of agricultural drought and forewarning of crop vigour. An Early warning indicator (EWI) was developed from operational product of rainfall and reference evapotranspiration from observations of Kalpana-1 very high resolution radiometer (VHRR). The effectiveness of EWI was evaluated for the two drought years (2009 and 2012). The positive correlation (r = 0.66–0.68 for 2009 and r = 0.64–0.70 for 2012) between the EWI in the month of June–July and standardized precipitation index-1 (SPI-1) averaged over administrative unit (called district) indicates that EWI can be used successfully for drought early warning. Lag-response behaviour between EWI and crop vigour in terms of normalized difference vegetation index (NDVI) and LAI (leaf area index) over cropland was studied. Systematic patterns emerged for 30 days lag period between negative EWI and NDVI at both grid-scale (0.25°) and at district level. Linear relations were found between 10-day EWI and NDVI or LAI at 30 days lag during June–July period. Linear models were developed to forewarn crop vigour which was validated with realized NDVI from INSAT 3A charge-coupled device (CCD) observations within 95% accuracy. The EWI is recommended as potential indicator for early-season agricultural drought assessment and can be used for sub-district scale with finer scale rainfall and evaporation products from advanced next-generation geostationary meteorological satellites.