The growth of the Indian Agriculture Industry and allied sectors was 4.4% in 2016-17. With a normal monsoon predicted by the India Meteorological Department (IMD), the growth this year is expected to surpass last year. The objective of doubling the farmers’ income by 2022 has led the government to intensively promoting farm mechanisation.
A recent report by MarketsandMarkets has projected the Asia-Oceania region as the largest and fastest growing agricultural equipment market and is projected to grow at a CAGR of 6.00% during 2017 to 2022. As per the report, China and India are projected to be the key contributors to the agricultural equipment market in the region. China and India along with the US will dominate the global farm tractor sales in the forecasted period. According to the ratings agency ICRA, the Indian tractor industry can expect a volume growth of 9%-10% in FY 2017-18.
The Indian Government aims for ‘one nation, one market’ and the same applies to the agriculture sector where the focus is on expanding the market reach for farmers to national level rather than be restricted to a local or state level market. The GST regime implemented on 1st July, 2017 is one hope to achieve this. Elimination of state level taxes will make inter-state trade of food products easier and also help to reduce transactions costs associated with their transport. The National Democratic Alliance (NDA) government is working on creating a common agricultural market and in April, the government put out a model law proposing a change in the way agricultural markets such as local markets and the state Agricultural Produce Marketing Committee (APMC) markets, operate. It proposes to replace existing fragmented and over-regulated markets for agricultural produce and allow farmers to reach national markets.
Contract farming has also been a lot in the talks – to connect farmers to the food processing industry. The Finance Minister Arun Jaitley in this year’s Union Budget announced to create a new legislation for reforms in agriculture for a better price realisation by farmers and to reduce post-harvest losses. In an aim to increase private participation in the sector, the National Institution for Transforming India (NITI Aayog) is preparing an outline structure for the proposed model Contract Farming Law. This will increase technology transfer and capital inflow from the private sector.
India’s position in the 2017 Global Innovation Index (GII) has moved up six ranks to 60th position in contrast to last year. The theme of GII 2017 was ‘Innovation Feeding the World’ – focused on innovation present in the agriculture and food systems. India outshined with an entire chapter of the report dedicated to outlining the ecosystem of digital technology in India’s Agriculture Industry. “India has shown improvement in most areas, including in infrastructure, business sophistication, knowledge and technology and creative outputs,” says the GII press release.
The Indian government remains committed towards rural development and agriculture mechanization. PM Modi invites global businesses to invest in India. In agriculture, his emphasis is on the opportunities in increasing yield through technological intervention, organic farming and value addition through food processing. Agriculture is one of the strongest pillars for the economic growth of the country and revolutionising agriculture is imperative to meet the aim of achieving 8%+ economic growth in the coming years. Though India has achieved much advancement, there is still much more scope for improvement to compete in the global markets.
To read the latest News about the Indian Agriculture Industry, click Agriculture Newsletter.