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Agriculture Sector in India

August, 2013


Agriculture is the backbone of Indian economy. The sector plays a vital role in the development of India with over 60 per cent of the country’s population deriving their subsistence from it. Most of the industries also depend upon the agriculture sector for their raw materials.

India ranks first in the production of milk, pulses, jute and jute-like fibres; second in rice, wheat, sugarcane, groundnut, vegetables, fruits and cotton production; and is a leading producer of spices and plantation crops as well as livestock, fisheries and poultry. The rapid growth of agriculture is essential not only for self-reliance but also for meeting the food and nutritional security of the people, to bring about equitable distribution of income and wealth in rural areas as well as to reduce poverty and improve the quality of life.

Department of Agriculture and Cooperation under the Ministry of Agriculture is the nodal organisation responsible for development of the agriculture sector in India. The organisation is responsible for formulation and implementation of national policies and programmes aimed at achieving rapid agricultural growth through optimum utilisation of land, water, soil and plant resources of the country.

Market Dynamics

India has improved its position in agricultural and food exports to 10th globally, backed by policy impetus by the government. “Exports of agricultural products are expected to cross US$ 22 billion mark by 2014 and account for 5 per cent of the world's agriculture exports,” according to the Agricultural and Processed Food Products Export Development Authority (APEDA).

Total exports of Indian agri and processed food products from April 2012 to March 2013 stood at Rs 11,633,168.41 lakh (US$ 17.26 billion) as compared to Rs 8,248,025.32 lakh (US$ 12.23 billion) during the same period last year, according to the data provided by APEDA.

India recorded an increase of 22 per cent in the export of spices and spice-based products during 2012-13 to touch 699,170 tonnes, as against 575,270 tonnes in the previous financial year. The soymeal exports during June 2013 was 213,400 tonnes as compared to 180,900 tonnes in the same period of previous year registering an increase of 18 per cent.

Groundnut sowing in Gujarat has touched 1.41 million hectares as on July 1, 2013 as against 0.22 million hectares in the corresponding period last year, according to Agriculture & Co-operation Department, Government of Gujarat.

The foreign direct investment (FDI) inflows in agricultural services and machinery sector during April 2000 to June 2013 stood at US$ 1,620.65 million and US$ 337.21 million respectively, as per the data released by Department of Industrial Policy and Promotion (DIPP).

Major Developments and Investments

A number of memorandum of understandings (MoU) were signed between Indian Council of Agricultural Research (ICAR) and the industry. MoUs have been signed for more than 60 ready-to-commercialize agro-technologies from different agricultural sectors like crops, horticulture, food technology, veterinary, agri-engineering, agri-inputs and fisheries.

The Abu Dhabi-based Al Dahra International Investment LLC is set to invest about Rs 112 crore (US$ 16.61 million) in Kohinoor Foods Ltd (KFL).

Private equity (PE) and venture capital (VC) firms invested US$ 126 million across nine Indian agri-business companies during the first six months of 2013, as per data from Venture Intelligence.

Coromandel International Ltd, India's leading fertiliser manufacturer, with its joint venture (JV) partners have inaugurated a 1.4 million tonne (MT) phosphoric acid plant in Tunisia.

The Indo-Dutch joint initiative in agriculture envisages setting up about 10 centres of excellence (CoE) in Punjab, Gujarat, Kerala, Maharashtra and Karnataka in the next few years, a move that could help raise output and yields.

The total outlay of Rs 27,049 crore (US$ 4.01 billion) has proposed for the Ministry of Agriculture in the Union Budget 2013-14, which is 22 per cent more than the revised estimates of the year 2012-13. Further, Rs 1,000 crore (US$ 148.38 million) has been allocated to continue support to the new green revolution in Eastern States like Assam, Bihar, Chhattisgarh and West Bengal to increase the rice production. An outlay of Rs 500 crore (US$ 74.19 million) is also proposed for starting a programme of crop diversification that would promote technological innovation and encourage farmers to choose crop alternatives in the original green revolution States.