The Agriculture Industry and allied sectors like livestock and forestry are significant contributors to the Indian economy contributing approx. 17% to the country’s GDP. Agriculture has substantially progressed in the recent years and is expected to grow at 4.1% this year. The growth witnessed is due to a higher income and rise in consumption, but also due to the impact of foreign players and investments that have entered the Indian market. The allowance of 100% FDI in most activities in the Agricultural Sector is luring foreign companies to enter the Indian market.
According to the Department of Industrial Policy and Promotion (DIPP), the Indian agricultural machinery and agricultural services sectors have attracted FDI equity inflow of about $2.31 billion from April 2000 to December 2016. With an allocation of approximately $28.8 billion for agriculture and rural development in this year’s budget, the Government has stressed the importance of focusing on agricultural development generating great opportunities for the agricultural commercialization. The emphasis is on new processes to enable higher production and productivity for farmers and to help them deal with post-harvest challenges. Due to a good monsoon in 2016 and various policy initiatives taken by the Government, India is expected to achieve a record of 272 million tonnes of food grain production in FY16-17 and the sector is prepared to see a surge in investments.
The Indo-Israeli trade relations have made extraordinary progress in recent years with trade jumping from $2.9 billion in FY2009 to $6 billion in FY2015. Israel has already set up 15 centres of excellence in agriculture in India across six states. Another 25 centres of excellence are planned to be set up in the next three years. In the centres, which are a part of the bigger Indo-Israel Agriculture Project, Israeli experts teach local farmers the concept of tissue culture, how to raise a plant nursery and provide support from latest farming and post-harvest technologies to increase the productivity. Apart from that, new activities like water recycling, agricultural machinery and organic farming will be explored in these centers.
To boost the Agricultural Industry the Union Cabinet has decided on an agreement between India and Poland on cooperation in the field of agriculture and allied sectors. The aim is to unite the two countries in terms of undertaking joint economic initiatives, including agri-food trade. Besides that the agreement will also contains more exchange of information between India and Poland on various aspects, including health of crops, as per the international trade requirements and threats posed by harmful organisms and diseases of crops.
According to the World Bank, India has 1.79 million km2 of land available for cultivation, of which only 60.4% is cultivated. The agricultural productivity is still quite low compared to other countries. India’s Agricultural Industry also didn’t keep up with the fast technological changes available in the global market and there are huge opportunities to explore. Several Indian Start-Ups like AgroStar or Crofarm have already emerged on the market to bring up new technologies to improve farming processes. Foreign companies and start-ups have started to look into solving problems in the industry. The German Company PEAT has entered the Indian market and wants to help farmers mitigate crop damage with the data capture feature of its app. PEAT also offers application programming interface (API) to other apps which can be used for improving crops and other farm management systems.
Another prospective area for investment in the Agricultural Industry is in the stage of post-harvest. Harvest and post-harvest losses in India were estimated at $14.2 billion between 2012 and 2014. Therefore there is a big need in developing strong warehousing system equipped with modern and scientific storage facilities. Estimated to be worth $1.3 billion, agricultural warehouses have become an attractive investment opportunity for private companies and foreign players. Global investors have recently invested large amounts in established post-harvest agri-logistics companies. The sector will continue to grow further with the Food Corporation of India (FCI) in participation with private players proposing to set up silos with a storage capacity of 2.15 million tonnes.
With an increasing population in India, there will be a greater need in food production. For this, it is crucial that India’s Agricultural Sector improves its productivity. One of the main barriers to farm productivity is the lack of new technologies and major breakthroughs. With the support of new private players entering the Indian farming market, rising foreign investments, the help of the Indian Government and foreign trades, productivity and technological progresses will significantly increase and boost the Indian Agriculture Industry.
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