Agricultural product is the 4th largest exported principal commodity with a share of 10 per cent of total exports of the country.

Indian Agriculture Industry: an overview

Latest update: January, 2016

Growth in Agriculture

• GDP of agriculture and allied sectors in India was recorded at US$ 259.23 billion in FY15

• According to the advanced estimates of Central Statistical Organisation, agriculture and allied sector recorded a growth of 8.3 per cent in FY15

• Agriculture is the primary source of livelihood for about 58 per cent of India’s population



Last Updated: January, 2016

Sectoral Report | January, 2016


Agriculture plays a vital role in India’s economy. Over 58 per cent of the rural households depend on agriculture as their principal means of livelihood. Agriculture, along with fisheries and forestry, is one of the largest contributors to the Gross Domestic Product (GDP).

As per estimates by the Central Statistics Office (CSO), the share of agriculture and allied sectors (including agriculture, livestock, forestry and fishery) was 16.1 per cent of the Gross Value Added (GVA) during 2014–15 at 2011–12 prices. During Q1 FY2016, agriculture and allied sectors grew 1.9 per cent year-on-year and contributed 14.2 per cent of GVA.

India is the largest producer, consumer and exporter of spices and spice products. It ranks third in farm and agriculture outputs. Agricultural export constitutes 10 per cent of the country’s exports and is the fourth-largest exported principal commodity. The agro industry in India is divided into several sub segments such as canned, dairy, processed, frozen food to fisheries, meat, poultry, and food grains.

The Department of Agriculture and Cooperation under the Ministry of Agriculture is responsible for the development of the agriculture sector in India. It manages several other bodies, such as the National Dairy Development Board (NDDB), to develop other allied agricultural sectors.

Market Size

Over the recent past, multiple factors have worked together to facilitate growth in the agriculture sector in India. These include growth in household income and consumption, expansion in the food processing sector and increase in agricultural exports. Rising private participation in Indian agriculture, growing organic farming and use of information technology are some of the key trends in the agriculture industry.

As per the 4th Advance Estimates, food grain production is estimated at 252.68 million tonnes (MT) for 2014-15. Production of pulses estimated at 17.20 million tonnes.

With an annual output of 138 MT, India is the largest producer of milk. It also has the largest bovine population. India is the largest importer of pulses at 19.0 MT and 3.4 MT, respectively. India, the second-largest producer of sugar, accounts for 14 per cent of the global output. It is the sixth-largest exporter of sugar, accounting for 2.76 per cent of the global exports.

Spice exports from India are expected to reach US$ 3 billion by 2016–17 due to creative marketing strategies, innovative packaging, strength in quality and strong distribution networks. The spices market in India is valued at Rs 40,000 crore (US$ 6.16 billion) annually, of which the branded segment accounts for 15 per cent.

The procurement target for rice during marketing season (MS) 2015–16 has been finalised as 30 MT.


Several players have invested in the agricultural sector in India, mainly driven by the government’s initiatives and schemes.

According to the Department of Industrial Policy and Promotion (DIPP), the Indian agricultural services and agricultural machinery sectors have cumulatively attracted foreign direct investment (FDI) equity inflow of about US$ 2,182 million from April 2000 to June 2015.

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

  • Mahindra & Mahindra (M&M), India’s leading tractor and utility vehicle manufacturer, announced its entry into pulses retailing under the brand ‘NuPro’. Going forward, the company plans to foray into e-retailing and sale of dairy products.
  • Fertilizer cooperative IFFCO launched a joint venture with Japanese firm Mitsubishi Corp for manufacturing agrochemicals in India.

  • Acumen, a not-for-profit global venture fund, has invested Rs 11 crore (US$ 1.7 million) in Sahayog Dairy, an integrated entity in the segment, based at Harda district in Madhya Pradesh.

  • Rabo Equity Advisors, the private equity arm of Netherlands-based Rabo Group, raised US$ 100 million for the first close of its second fund – India Agri Business Fund II. The fund plans to invest US$ 15–17 million in 10–12 companies.
  • Oman India Joint Investment Fund (OIJIF), a joint venture (JV) between the State Bank of India (SBI) and State General Reserve Fund (SGRF), invested Rs 95 crore (US$ 14.62 million) in GSP Crop Science, a Gujarat-based agrochemicals company.

  • The world's seventh-largest agrochemicals firm, Israel-based ADAMA Agrochemicals plans to invest at least US$ 50 million in India over the next three years.

  • Belgium-based Univeg has collaborated with Mahindra & Mahindra to develop a fresh fruit supply chain.

  • Companies from the US, Canada, Australia, Israel, the Netherlands and other European countries have shown strong interest to transfer the best practices, linkages between scientific institutes, agriculture storage, cold-chain management, market access, and productivity enhancement such as the introduction of new technology in seed and plant biotech.
  • Canada-based International Food Security Research Fund has major investments in food security research in several Indian universities. These strengthen food-processing and sustainable agricultural techniques.

Government Initiatives

Given the importance of the agriculture sector, the Government of India, in its Budget 2015–16, planned several steps for the sustainable development of agriculture. The government has already taken steps to address two major factors (soil and water) critical to improve agriculture production. Steps have been taken to improve soil fertility on a sustainable basis through the soil health card scheme and to support the organic farming scheme ‘Paramparagat Krishi Vikas Yojana’. Other steps include improved access to irrigation through ‘Pradhanmantri Gram Sinchai Yojana’; enhanced water efficiency through `Per Drop More Crop’; continued support to Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and the creation of a unified national agriculture market to boost the incomes of farmers.  

The Government of India recognises the importance of microirrigation, watershed development and ‘Pradhan Mantri Krishi Sinchai Yojana’; thus, it allocated a sum of Rs 5,300 crore (US$ 815 million) for it. It urged the states to focus on this key sector. The state governments are compelled to allocate adequate funds to develop the agriculture sector, take measures to achieve the targeted agricultural growth rate and address the problems of farmers.

The Department of Agriculture and Cooperation under the Ministry of Agriculture has inked MOUs/agreements with 52 countries including the US. In addition, the Department of Agriculture Research & Education (DARE) and the Department of Animal Husbandry, Dairying & Fisheries (DAHD&F) under the Ministry of Agriculture have signed MOUs/agreements with other countries, taking the number of partnerships with other countries to 63. These agreements would provide better agricultural facilities in areas such as research and development, capacity building, germ-plasm exchange, post-harvest management, value addition/food processing, plant protection, animal husbandry, dairy and fisheries. The agreements could help enhance bilateral trade as well.

Given the correlation between improvement in agriculture and the development of the country, the Government of India adopted several initiatives and programmes to ensure continuous growth. It allocated Rs 25,000 crore (US$ 3.9 billion) for the Rural Infrastructure Development Fund (RIFD), Rs 1,500 crore (US$ 231 million) for the long-term rural credit fund, Rs 45,000 crore (US$ 6.93 billion) for the short-term cooperative rural credit finance fund and Rs 25,000 crore (US$ 3.85 billion) for the short-term Regional rural bank (RRB) refinance fund. It also marked an ambitious target of Rs 8.5 lakh crore (US$ 130.9 billion) of agriculture credit during 2015–16.

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

  • India and Lithuania have agreed to intensify agricultural cooperation, especially in sectors like food and dairy processing.
  • Gujarat Government has planned to connect 26 Agricultural Produce Market Committees (APMCs) via electronic market platform, under the National Agriculture Market (NAM) initiative.
  • The State Government of Telangana plans to spend Rs 81,000 crore (US$ 12.1 billion) over the next three years to complete ongoing irrigation projects and also undertake two new projects for lifting water from the Godavari and Krishna river.
  • The National Dairy Development Board (NDDB) announced 42 dairy projects with a financial outlay of Rs 221 crore (US$ 34.02 million) to boost milk output and increase per animal production of milk.
  • The government planned to invest Rs 50,000 crore (US$ 7.7 billion) to revive four fertiliser plants and set up two plants to produce farm nutrients.
  • The Ministry of Food Processing Industries took some new initiatives to develop the food-processing sector that would enhance the income of farmers and export of agro and processed foods, among others.
  • The Government of Telangana allocated Rs 4,250 crore (US$ 654 million) for the first phase of the farm loan waiver scheme. The scheme is expected to benefit 3.6 million farmers who took loans of Rs 100,000 (~US$ 1,539) or below before March 31, 2014.

Road Ahead

The agriculture sector in India is expected to generate better momentum in the next few years due to increased investments in agricultural infrastructure such as irrigation facilities, warehousing and cold storage. Factors such as reduced transaction costs and time, improved port gate management and better fiscal incentives would contribute to the sector’s growth. Furthermore, the growing use of genetically modified crops will likely improve the yield for Indian farmers.

The 12th Five-Year Plan estimates the foodgrains storage capacity to expand to 35 MT. Also, a 4 per cent growth would help restructure the agriculture sector in India in the next few years.

Exchange rate used: INR1= US$ 0.0154 as of October 26, 2015

References: The Economic Survey 2014–15, Agricultural and Processed Food Products Export Development Authority (APEDA), Department of Commerce and Industry 2014–15, Union Budget 2015–16, Press Information Bureau, Ministry of Statistics and Programme Implementation, Press Releases, Media Reports

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.


Brand India Pharma


India exported nearly 20 million tonnes of foodgrain in 2012-2013, becoming a major contributor to the world's food basket.

+ More >

Brand India Pharma

IBEF Publications

IBEF Publication

India Now Magazine

India Now Business and Economy

+ More Publications >

IBEF Publication

Blog – Perspectives on India More

Powered by the Who's Who of India

Loading blogs ...

ideas More


eToilets, the self-flushing, self-monitoring technology-based sanitation solution, is no longer a dream, but has been brought into reality by Eram Scientific Solutions (ESS).


Join now. Enjoy FREE subscriptions downloads, updates and more.


Already a member?
Login / Retrieve Password

Copyright © 2010-2016 India Brand Equity Foundation

All material, information, data, images or content on this website is subject to copyright or other applicable intellectual property laws and no part of it can be reproduced in any form (including paper or electronic form) without prior written consent and approval from IBEF. Infringements are subject to prosecution under the applicable laws. For consent related queries and conditions,
please write to

IndiaAn initiative of the Ministry of Commerce & Industry, Government of India