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AdvantageIndia
AdvantageIndia AgricultureSector

AgricultureSector
AdvantageIndia
LastUpdated:October,2016
IndianEconomy Introduction
AgricultureplaysavitalroleinIndiaseconomy.Over58percentoftheruralhouseholdsdependonagricultureastheirprincipalmeans
AgricultureSector
oflivelihood.Agriculture,alongwithfisheriesandforestry,isoneofthelargestcontributorstotheGrossDomesticProduct(GDP).
IndustrySector As per estimates by the Central Statistics Office (CSO), the share of agriculture and allied sectors (including agriculture, livestock,
forestryandfishery)was15.35percentoftheGrossValueAdded(GVA)during201516at201112prices.
ServicesSector
India is the largest producer, consumer and exporter of spices and spice products. India's fruit production has grown faster than
India:AnAttractive vegetables,makingitthesecondlargestfruitproducerintheworld.India'shorticultureoutput,comprisingfruits,vegetablesandspices,
DestinationforFDI isestimatedtobe283.4milliontonnes(MT)in201516afterthethirdadvancedestimate.Itranksthirdinfarmandagricultureoutputs.
Agricultural export constitutes 10 per cent of the countrys exports and is the fourthlargest exported principal commodity. The agro
ForeignInstitutional industryinIndiaisdividedintoseveralsubsegmentssuchascanned,dairy,processed,frozenfoodtofisheries,meat,poultry,andfood
Investment(FII)inIndia grains.
TheDepartmentofAgricultureandCooperationundertheMinistryofAgricultureisresponsibleforthedevelopmentoftheagriculture
IndianStatesandUnion
sector in India. It manages several other bodies, such as the National Dairy Development Board (NDDB), to develop other allied
Territories
agriculturalsectors.
StatesofIndia MarketSize
Overtherecentpast,multiplefactorshaveworkedtogethertofacilitategrowthintheagriculturesectorinIndia.Theseincludegrowthin
UnionTerritoriesofIndia
household income and consumption, expansion in the food processing sector and increase in agricultural exports. Rising private
SectoralOpportunities participation in Indian agriculture, growing organic farming and use of information technology are some of the key trends in the
agricultureindustry.
SuccessStories Asperthe3rdAdvanceEstimates,India'sfoodgrainproductionhasincreasedmarginallyto252.23milliontonnes(MT)inthe201516
cropyear.Productionofpulsesisestimatedat17.06milliontonnes.
Withanannualoutputof146.31MT,Indiaisthelargestproducerofmilk,accountingfor18.5percentofthetotalworldproduction.Italso
hasthelargestbovinepopulation.India,thesecondlargestproducerofsugar,accountsfor14percentoftheglobaloutput.Itisthe
sixthlargestexporterofsugar,accountingfor2.76percentoftheglobalexports.Indiaisaleadingcountryincoconutproductionand
productivityintheworld,withannualproductionof2,044crorecoconutsandtheproductivityof10,345coconutsperhectareason2015
16.SpiceexportsfromIndiaareexpectedtoreachUS$3billionby201617duetocreativemarketingstrategies,innovativepackaging,
strengthinqualityandstrongdistributionnetworks.ThespicesmarketinIndiaisvaluedatRs40,000crore(US$5.87billion)annually,
of which the branded segment accounts for 15 per cent. In fact, the Spices Board of India has decided to set up a spice museum
atWillingdonIslandinKochitoattractandeducatetouristsandseafarersaboutthehistoryandgrowthofIndianspicesindustry.
Indian agrochemical industry is expected to grow at 7.5 per cent annually to reach US$ 6.3 billion by 2020 with domestic demand
growingat6.5percentperannumandexportdemandat9percentperannum*.
Investments
SeveralplayershaveinvestedintheagriculturalsectorinIndia,mainlydrivenbythegovernmentsinitiativesandschemes.
According to the Department of Industrial Policy and Promotion (DIPP), the Indian agricultural services and agricultural machinery
sectorshavecumulativelyattractedForeignDirectInvestment(FDI)equityinflowofaboutUS$2,278.3millionfromApril2000toMarch
2016.
Somemajorinvestmentsanddevelopmentsinagricultureintherecentpastareasfollows:
IntertekGroup,aUKbasedtotalqualityassuranceprovider,haslaunchedanagriculturaltechnology(Agritech)Laboratoryin
Hyderabad,whichwillperformhightechdeoxyribonucleicacid(DNA)analysesfortheagribiotech,plantseeds.
ITCLtd,oneofIndia'sleadingfastmovingconsumergoods(FMCG)company,planstomakeAndhraPradeshahubforits
agriculturalbusinessoperations.
MahindraandMahindraLtdhasacquired35percentstakeinaFinnishcombineharvestersmanufacturer,SampoRoselnewOy,
forUS$20.46millionandwilljointlyfocusonthecombineharvesterbusinessinAsia,AfricaandEurasianEconomicUnion
countries.
TheSmallFarmersAgriBusinessConsortium(SFAC)planstoorganisecampsinMadhyaPradeshandChhattisgarhtopromote
itsventurecapitalassistancescheme(VCAS),whichseekstoprovidecapitalandprojectdevelopmentfacility(PDF)toagri
businessentrepreneurs.
AgriresearchinstituteICRISATsincubationarmislookingtosetupaRs.100crore(US$14.67million)fundinayear,aninitiative
thatcouldhelpsmallentrepreneursfromtheagribusinessandnutritionspaceraisemoney.
Mahindra&Mahindra(M&M),Indiasleadingtractorandutilityvehiclemanufacturer,announceditsentryintopulsesretailing
underthebrandNuPro.Goingforward,thecompanyplanstoforayintoeretailingandsaleofdairyproducts.
FertilisercooperativeIFFCOlaunchedajointventurewithJapanesefirmMitsubishiCorpformanufacturingagrochemicalsinIndia.
 Acumen,anotforprofitglobalventurefund,hasinvestedRs11crore(US$1.7million)inSahayogDairy,anintegratedentityin
thesegment,basedatHardadistrictinMadhyaPradesh.
RaboEquityAdvisors,theprivateequityarmofNetherlandsbasedRaboGroup,raisedUS$100millionforthefirstcloseofits
secondfundIndiaAgriBusinessFundII.ThefundplanstoinvestUS$1517millionin1012companies.
OmanIndiaJointInvestmentFund(OIJIF),ajointventure(JV)betweentheStateBankofIndia(SBI)andStateGeneralReserve
Fund(SGRF),investedRs95crore(US$13.94million)inGSPCropScience,aGujaratbasedagrochemicalscompany.
GovernmentInitiatives
Giventheimportanceoftheagriculturesector,theGovernmentofIndia,initsBudget201617,plannedseveralstepsforthesustainable
developmentofagriculture.
Budget201617proposedaslewofmeasurestoimproveagricultureandincreasefarmerswelfaresuchas2.85millionhectarestobe
broughtunderirrigation,Rs287,000crore(US$42.11billion)grantinaidtobegiventogrampanchayatsandmunicipalitiesand100
percentvillageelectrificationtargetedbyMay01,2018.Thegovernmenthassetanambitioustargetofproducingarecord270.1MTof
foodgrainsin201617,7percenthigherthanthe252.23MTofproductionestimatedfor201516.
TheGovernmentofIndiahasstartedworkon99majorandmediumirrigationprojects,slatedtobecompletedby2019.Theseprojects
willbring7.6millionhectaresoflandunderirrigationinsomeofthemostdroughtproneregionsofIndia.
Thegovernmenthasalreadytakenstepstoaddresstwomajorfactors(soilandwater)criticaltoimproveagricultureproduction.Steps
havebeentakentoimprovesoilfertilityonasustainablebasisthroughthesoilhealthcardschemeandtosupporttheorganicfarming
schemeParamparagatKrishiVikasYojana.OtherstepsincludeimprovedaccesstoirrigationthroughPradhanmantriGramSinchai
Yojanaenhancedwaterefficiencythrough`PerDropMoreCropcontinuedsupporttoMahatmaGandhiNationalRuralEmployment
GuaranteeAct(MGNREGA)andthecreationofaunifiednationalagriculturemarkettoboosttheincomesoffarmers.
The Government of India recognises the importance of microirrigation, watershed development and Pradhan Mantri Krishi Sinchai
Yojanathus,itallocatedasumofRs5,300crore(US$777.6million)forit.Iturgedthestatestofocusonthiskeysector.Thestate
governments are compelled to allocate adequate funds to develop the agriculture sector, take measures to achieve the targeted
agriculturalgrowthrateandaddresstheproblemsoffarmers.
The Department of Agriculture and Cooperation under the Ministry of Agriculture has inked MOUs/agreements with 52 countries
includingtheUS.Inaddition,theDepartmentofAgricultureResearch&Education(DARE)andtheDepartmentofAnimalHusbandry,
Dairying&Fisheries(DAHD&F)undertheMinistryofAgriculturehavesignedMOUs/agreementswithothercountries,takingthenumber
ofpartnershipswithothercountriesto63.Theseagreementswouldprovidebetteragriculturalfacilitiesinareassuchasresearchand
development, capacity building, germplasm exchange, postharvest management, value addition/food processing, plant protection,
animalhusbandry,dairyandfisheries.Theagreementscouldhelpenhancebilateraltradeaswell.
Giventhecorrelationbetweenimprovementinagricultureandthedevelopmentofthecountry,theGovernmentofIndiaadoptedseveral
initiatives and programmes to ensure continuous growth. It allocated Rs 25,000 crore (US$ 3.67 billion) for the Rural Infrastructure
DevelopmentFund(RIFD),Rs1,500crore(US$220million)forthelongtermruralcreditfund,Rs45,000crore(US$6.60billion)forthe
shorttermcooperativeruralcreditfinancefundandRs25,000crore(US$3.67billion)fortheshorttermRegionalruralbank(RRB)
refinancefund.ItalsomarkedanambitioustargetofRs8.5lakhcrore(US$124.71billion)ofagriculturecreditduring201516.
Someoftherecentmajorgovernmentinitiativesinthesectorareasfollows:
Thegovernmenthasdrawnupafiveyearroadmaptoincreasepulseproductionfromnearly17.06MTin201516to24MTin
202021throughadedicatedactionplan.
PrimeMinisterMrNarendraModihasunveiledtheoperationalguidelinesforthePradhanMantriFasalBimaYojanawhichaimsto
providefarmerswithcropinsuranceaswellas
TheCabinetCommitteeonEconomicAffairs(CCEA)hasapprovedBlueRevolution,anumbrellaschemeforintegrated
developmentandmanagementoffisheriesbyGovernmentofIndia,withtotalfinancialoutlayofRs3,000crore(US$440.15
million)foraperiodoffiveyears.
MrPiyushGoyal,MinisterofPower,Coal,NewandRenewableEnergyhasannouncedthatgovernmentsplanstoinvestRs
75,000crore(US$11.08billion)inanenergyefficientirrigationschemeoverthenextthreetofouryears.
Thenewcropinsuranceschemeforfarmers'BhartiyaKrishiBimaYojana'aimstocover50percentofthefarmersunderthe
schemeinthenexttwothreeyears,
IndiaandLithuaniahaveagreedtointensifyagriculturalcooperation,especiallyinsectorslikefoodanddairyprocessing.
GujaratGovernmenthasplannedtoconnect26AgriculturalProduceMarketCommittees(APMCs)viaelectronicmarketplatform,
undertheNationalAgricultureMarket(NAM)initiative.
TheStateGovernmentofTelanganaplanstospendRs81,000crore(US$11.88billion)overthenextthreeyearstocomplete
ongoingirrigationprojectsandalsoundertaketwonewprojectsforliftingwaterfromtheGodavariandKrishnariver.
TheNationalDairyDevelopmentBoard(NDDB)announced42dairyprojectswithafinancialoutlayofRs221crore(US$32.42
million)toboostmilkoutputandincreaseperanimalproductionofmilk.
GovernmentofIndiahassetupaninterministerialcommittee,whichwilllookintowaystoexaminethepotentialofIndian
agriculture,identifysegmentswithpotentialforgrowth,andworktowardsdoublingfarmincomesby2022.
TheGovernmentofIndiahasallocatedRs200crore(US$29.9million)forelectronicallylinking585majorwholesaleagriculture
marketsacrossthecountry,therebycreatingaNationalAgricultureMarket(NAM)inJuly2015forthreeyears
RoadAhead
The agriculture sector in India is expected to generate better momentum in the next few years due to increased investments in
agriculturalinfrastructuresuchasirrigationfacilities,warehousingandcoldstorage.Factorssuchasreducedtransactioncostsandtime,
improvedportgatemanagementandbetterfiscalincentiveswouldcontributetothesectorsgrowth.Furthermore,thegrowinguseof
geneticallymodifiedcropswilllikelyimprovetheyieldforIndianfarmers.
AccordingtotheNationalInstitutionforTransformingIndiaAayog(NITIAayog),Indiasagriculturesectorisexpectedtogrow6percent
inFY201617incaseofnormalmonsoonduringtheJuneSeptemberperiod.The12thFiveYearPlanestimatesthefoodgrainsstorage
capacitytoexpandto35MT.Also,a4percentgrowthwouldhelprestructuretheagriculturesectorinIndiainthenextfewyears.
Exchangerateused:INR1=US$0.0149asofSeptember26,2016
References: The Economic Survey 201516, Agricultural and Processed Food Products Export Development Authority (APEDA),
Department of Commerce and Industry 201516, Union Budget 201617, Press Information Bureau, Ministry of Statistics and
ProgrammeImplementation,PressReleases,MediaReports
Note:*asperareportjointlypresentedbyTataStrategicManagementGroup(TSMG)andFICCI

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