Despite the focus on industrialisation, agriculture remains a dominant sector of the Indian economy both in terms of contribution to gross domestic product (GDP) as well as a source of employment to millions across the country.

Agriculture, along with fisheries and forestry, accounts for one-third of the nation’s GDP and is its single largest contributor.

The country is also the largest producer, consumer and exporter of spices and spice products in the world and overall in farm and agriculture outputs, it is ranked second. The increasing private participation in Indian agriculture, growing organic farming and usage of information technology are the trends that are being witnessed by the agriculture industry.

With an annual output of 130 MT, India is the largest producer of the milk in the world; it also has the largest milk-producing animal population of over 118 million. India is the biggest producer of pulses in the world at 19 MT and their biggest importer 3.5 MT. India is the second largest producer of sugar in the world and the government has aimed to increase the exports from 1.3 MT in 2013 to an average of 2 MT in 2015.

Spice exports from India are expected to reach US$ 3 billion by 2016-17, on the back of creative marketing strategies, innovative packaging, strength in quality and a strong distribution network. The Indian spices market is pegged at Rs 40,000 crores (US$ 6.42 billion) annually, of which the branded segment accounts for 15 per cent.

Few of current foreign Investments

Prompted by the Indian government's initiatives, there have been various investments in the Indian agricultural sector.

The Indian agricultural services and the agricultural machinery sectors have cumulatively attracted foreign direct investment (FDI) equity inflows to the tune of US$ 2,153.61 million in the period April 2000-December 2014.

Some of the major investments and developments in agriculture in the recent past are as follows:

  • The Oman India Joint Investment Fund (OIJIF), a joint venture (JV) between State Bank of India (SBI) and State General Reserve Fund (SGRF), has invested Rs 95 crores (US$ 15.25 million) in GSP Crop Science, a Gujarat-based agrochemicals company.
  • Israel based world's seventh largest agrochemicals firm ADAMA Agrochemicals plans to invest at least US$ 50 million in India over the next three years.
  • Tafe Motors and Tractors Ltd (TAFE) has invested around US$ 140 million by way of equity in the US-based AGCO Corporation, a worldwide manufacturer and distributor of agricultural equipment.
  • Canada is keen to partner with India in the agriculture and processing sectors, particularly in pulses and canola.

Government Initiatives and Future Plans

The Government a number of steps for sustainable development of agriculture such as enhanced institutional credit to farmers; promotion of scientific warehousing infrastructure including cold storages and cold chains in the country for increasing shelf life of agricultural produce The Department of Agriculture & Cooperation under Ministry of Agriculture has entered into MOUs/Agreements with 52 countries including United State of America, in addition, Department of Agriculture Research & Education (DARE) and Department of Animal Husbandry, Dairying & Fisheries (DAHD&F) under Ministry of Agriculture have also entered into MOUs/Agreements with 63 countries. Agreements with these countries provide better agricultural facilities due to cooperation in areas such as Research and Development, Capacity Building, Germ-Plasm Exchange, Post-Harvest Management, Value Addition/ Food Processing, Plant Protection, Animal Husbandry, Dairy & Fisheries and also help in enhancing bilateral trade.

Some of the recent major government initiatives in the sector are as follows:

  • The National Dairy Development Board (NDDB) has announced 42 dairy projects with a financial outlay of Rs 221 crores (US$ 35.47 million) in order to boost milk output in the country and increase per animal production of milk.
  • The Government of India has planned to invest Rs 50,000 crores (US$ 8.02 billion) to revive four fertilizer plants and set up two new plants to produce farm nutrients.
  • The Ministry of Food Processing Industries has taken some new initiatives to develop the food processing sector which will also help to enhance the incomes of farmers and export of agro and processed foods among others.
  • Israel has increased its cooperation with Indian agriculture, helping farmers multiply their income with better practices, yields and choosing the right crops or vegetables in a success story that is boosting bilateral ties that have strengthened.
  • The Government of Telangana has allocated Rs 4,250 crores (US$ 682.31 million) for the first phase of farm loan waiver scheme. The scheme is expected to benefit 3.6 million farmers who had taken loans of Rs 100,000 (US$ 1,605.46) or below before March 31, 2014.

The Indian agriculture sector is expected to grow with better momentum owing to increase in investment in agricultural infrastructure such as irrigation facilities, warehousing and cold storage. The 12th Five Year Plan’s estimates of expanding the storage capacity to 35 MT and the target of achieving an overall growth of 4 per cent will also go a long way in modifying the overall face of the Indian agriculture sector in the next few years.

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