Go Back

Indian Agriculture Industry: an overview

November, 2014


The Indian agriculture sector accounts for 18 per cent of India's gross domestic product (GDP) and employs just a little less than 50 per cent of the country's workforce. This sector has made considerable progress in the last few decades with its large resources of land, water and sunshine. India is presently the world's largest producer of pulses and the second largest producer of rice and wheat.

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. From canned, dairy, processed, frozen food to fisheries, meat, poultry, and food grains, the Indian agro industry has plenty of areas to choose for business.

The Department of Agriculture and Cooperation under the Ministry of Agriculture is the nodal organisation responsible for the development of the agriculture sector in India. Under it, several other bodies such as the National Dairy Development Board (NDDB) work for the development of the other allied agricultural sectors.

Market Size

The Indian agricultural services and the agricultural machinery sectors have cumulatively attracted foreign direct investment (FDI) equity inflows to the tune of US$ 365.79 million in the period April 2000-September 2014, according to the Department of Industrial Policy and Promotion (DIPP).

In 2013-14 India achieved a record food grain production of 264 million tonnes (MT), beating the previous year's (2012-13) 257 MT, according to data provided by Department of Economics and Statistics (DES). Also, agricultural profitability has increased over the last decade with record increases in MSPs (minimum support prices) for agricultural produce for all covered crops.

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 2014 and 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 crore (US$ 6.46 billion) annually, of which the branded segment accounts for 15 per cent.

India is the largest producer of milk since 1998 and accounts for about 17 per cent of the world's milk production. The average growth in milk production in the country in the last decade was 4.2 per cent as against the world average of 2.2 per cent, indicating a healthy trend.

The procurement target for rice during Kharif Marketing Season (KMS) 2014-15 has been finalised as 30.05 million tonnes (MT).


Prompted by the Indian government's initiatives, there has been various investments in the Indian agricultural sector. The major investments and developments in agriculture in the recent past are as follows:

  • Metahelix Life Sciences has launched a new variety of maize hybrid seeds for improved productivity. The new hybrid MM 2100 has plant structure with upright leaves that allows higher growth and the cob size does not get reduced due to less gap between plants.
  • The International Crops Research Institute for Semi-Arid Tropics (ICRISAT) and Ramoji Film City (RFC) have signed a MoA (Memorandum of Agreement) on Sustainable Management of Water Resources and Sustainable Agriculture Development through the establishment of an Agriculture Theme Park at RFC.
  • Tata Global Beverages (TGB) has initiated research and development (R&D) under Project Sustainable Plant Protection Formulation (S-PPF) to evaluate the viability of biological or non-pesticidal methods for plant protection of tea crops. The project is a collaborative effort between TGB, Rallis and Tata Chemicals.
  • ICRISAT plans to invest US$ 5 million in upgrading research infrastructure in Africa. The funds will also be used for building scientific skills in sub-Saharan Africa.
  • The Agricultural and Processed Food Products Export Development Authority (APEDA) has signed a Memorandum of Understanding with Maharashtra State Warehousing Corporation (MSWC) for setting up of infrastructure for cold storage at Gultekdi, the wholesale market yard in Pune. The proposed project involves facilities for cold storage, pre-cooling and blast freezing.

Government Initiatives

The Government of India has adopted and implemented several initiatives in the past few months. Some of the recent major initiatives are as follows:

  • The Ministry of Food Processing Industries has taken some new initiatives to develop the food processing sector, which will help to enhance the incomes of farmers and export of agro and processed foods, among others. It also includes the opening of Mega Food Parks and reduction in excise duties for Food Processing machinery.
  • The Government of Telangana has allocated Rs 4,250 crore (US$ 687.38 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$ 1,617.37) or below before March 31, 2014.
  • The Government of India plans to launch a new insurance scheme to protect farmers and their incomes against production and price risks. The new insurance scheme is expected to encourage farmers towards crop diversification.
  • The Ministry of Agriculture, Government of India, has signed a Memoranda of Understanding (MoU) with 52 countries to provide better agricultural facilities for cooperation in the field of agriculture and allied sectors.
  • India and Bhutan plans to strengthen strategic cooperation in the field of agriculture and allied sectors.
  • The Government of India plans to invest Rs 50,000 crore (US$ 8.08 billion) to revive four fertiliser plants and set up two new plants to produce farm nutrients. In addition, the government is also in talks with the Government of Iran to set up a 1.2 million tonnes per annum (MTPA) urea plant in Iran on the lines of India's joint venture (JV) with Oman.

Road Ahead

The government's liberal FDI policies have opened the doors for several foreign companies to set up operations in India. Also, there is scope for the use of genetically modified crops to increase the yield in farms. The 12th Five-Year Plan's estimates of expanding the storage capacity to 35 MT and the target of achieving an overall growth of four per cent will help in improving the growth of the agriculture sector.

Furthermore, Dairy Vision 2025 has been planned to take stock of the current situation across the dairy value chain and evolve strategies for increasing productivity and profitability of farmers.

Exchange rate used: INR 1= US$ 0.016 as on November 27, 2014

References:The Economic Survey, Agricultural and Processed Food Products Export Development Authority (APEDA), The Union Budget 2014-15, Press Releases, Media Reports