Agriculture in India: Information About Indian Agriculture & Its Importance

India’s share in world agricultural exports increased to 2.1% in 2019 from 1.71% in 2010.

Advantage India

Robust
Demand

* A large population and rising urban and rural income is driving the demand. External demand is driving export from agriculture sector.

Attractive
Opportunities

* Demand for agricultural inputs such as hybrid seeds and fertilizers and allied services like warehousing and cold storages is increasing in India at a fast pace.

Policy
Support

* The govt. announced a PLI scheme for the food processing sector with an incentive outlay of Rs 10,900 crore (US$ 1,484 million) over a period of six years starting from FY22. The Krishi UDAN 2.0 scheme proposes assistance and incentive for movement of agri-produce by air transport.

Competitive
Advantage

* High proportion of agricultural land, diverse agro-climatic conditions encourage cultivation of different crops.

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Last updated: Apr, 2022

Agriculture and Allied Industries Industry Report

Feb, 2022

Introduction

India has the second-largest arable land resources in the world. With 20 agri-climatic regions, all the 15 major climates in the world exist in India. The country also has 46 of the 60 soil types in the world. India is the largest producer of spices, pulses, milk, tea, cashew, and jute, and the second largest producer of wheat, rice, fruits and vegetables, sugarcane, cotton, and oilseeds. Further, India is second in the global production of fruits and vegetables and is the largest producer of mango and banana. During 2019-20 crop year, food grain production reached a record of 296.65 million tonnes. For FY 2021-22, the government has set a target to increase production by 3.9%. Consumer spending in India will return to growth in 2022 post the pandemic-led contraction, expanding by as much as 7%. Private consumption expenditure (at constant prices) was estimated at Rs. 80.8 trillion (US$ 1.08 trillion) in FY22 against Rs. 75.6 trillion (US$ 1.01 trillion) in FY20.

Total area sown with rabi crops was 34.8 million hectares by November 27, 2020, 4% more than the previous season, and 2% above the average of the last five years. According to the Ministry of Agriculture, 44% of wheat and other rabi crops were harvested out of a total of 97 lakh hectares sown area in the 2020-21 rabi season. As of October 27, 2021, the total rabi area stood at 0.53 lakh hectares. A total of 50.90 lakh hectares of kharif crops will be sown in the kharif season of 2021-22. In the rabi marketing season 2021-22, the government purchased a record 43.33 MT of wheat. In case of pulses and oilseeds, the government through nodal agencies has procured total 1.04 million tonne at MSP value of US$ 761.63 million (Rs. 5662.82 crores) so far in 2021.

Production of horticulture crops in India reached a record 331.05 million metric tonnes (MMT) in 2020–21 (as per 3rd advance estimate), an increase of 10.5 million metric tonnes over FY20. The production of fruits, flowers, spices and honey is expected to rise. India has the largest livestock population of around 535.78 million, which translates to around 31% of the world population. Milk production in the country is expected to increase to 208 MT in FY21 from 198 MT in FY20, registering a growth of 10% y-o-y.

India can be among the top five exporters of agro-commodities by shifting its focus on cultivation and effectively handholding farmers, according to the World Trade Centre. The total agricultural and allied products exports stood at US$ 41.25 billion in FY21. The principal commodities that posted significant positive growth in exports between FY20 and FY21 were the following:

Wheat and Other Cereals: 727% from Rs. 3,708 crore (US$ 505 million) to Rs. 5,860 crore (US$ 799 million)
Non-Basmati Rice: 132% from Rs. 13,130 crore (US$ 1,789) to Rs. 30,277 crore (US$ 4,126 million)
Soya Meal: 132% from Rs. 3,087 crore (US$ 421 million) to Rs. 7,224 crore (US$ 984 million)
Raw Cotton: 68% from Rs. 6,771 crore (US$ 923 million) to Rs. 11,373 crore (US$ 1,550 million)
Sugar: 39.6% from Rs. 12,226 crore (US$ 1,666 million) to Rs. 17,072 crore (US$ 2,327 million)
Spices: 11.5% from Rs. 23,562 crore (US$ 3,211 million) to Rs. 26,257 crore (US$ 3,578 million)

The Agriculture Export Policy, 2018 aimed to increase India’s agricultural export to Rs. 4,19,340 crore (US$ 60 billion) by 2022. Government aims to raise fishery export from India to Rs. 1 lakh crore (US$ 14.31 billion) by 2024-25.

In 2021, India witnessed growth in agriculture product exports:

In June 2021, India exported 24 metric tonnes of groundnuts to Nepal from West Bengal, boosting groundnut exports from Eastern India.
In FY21, India exported 1.91 lakh tonnes of banana worth Rs. 619 crore (US$ 82.90 million).

According to Department for Promotion of Industry and Internal Trade (DPIIT), Indian food processing industry attracted Foreign Direct Investment (FDI) equity inflow of about US$ 15.02 billion between April 2000 and November 2021.

Gross Value Added by agriculture, forestry, and fishing was estimated at Rs. 19.48 lakh crore (US$ 276.37 billion) in FY20. Share of agriculture and allied sectors in gross value added (GVA) of India at current prices stood at 17.8 % in FY20.

The Ministry of Agriculture and Farmers Welfare's budget has been enhanced from Rs. 1.25 lakh crore (US$ 16.20 billion) in 2020-21 to Rs. 1.32 lakh crore (US$ 17.28 billion) in 2021-22.

NABARD will assist the creation of a blended capital fund with a focus on the agricultural start-up ecosystem which will be used to fund agriculture and rural enterprise startups that are related to the farm product value chain.

The government is promoting the use of drones in agriculture by providing financial assistance through the 'Sub-Mission on Agriculture Mechanization.'

A network of 729 Krishi Vigyan Kendras has been established at the district level across the country to ensure that newer technologies such as improved variety seeds of crops, new breeds/ strains of livestock and fish, and improved production and protection technologies reach farmers.

In October 2021, the Union Minister of Home Affairs launched the ‘Dairy Sahakar’ scheme in Anand, Gujarat.

In September 2021, Prime Minister Mr. Narendra Modi launched 35 crop varieties with special traits such as climate resilience and higher nutrient content.

The Electronic National Agriculture Market (e-NAM), launched in April 2016 to create a unified national market for agricultural commodities by networking existing Agriculture Produce Marketing Committees (APMCs), had 16.6 million farmers and 131,000 traders registered on its platform until May 2020. As per the Union Budget 2021-22, government announced that through e-NAM (National Agriculture Market), ~1.68 crore farmers were registered and trade worth Rs. 1.14 lakh crore (US$ 15.63 billion) was carried out; 1,000 more mandis will be integrated to achieve transparency and bring competitiveness.

The Government of India has introduced several projects to assist the agriculture sector. Pradhan Mantri Gram Sinchai Yojana (PMGSY) aims to irrigate the field of every farmer and improve water use efficiency to achieve the motto, `Per Drop More Crop’. Overall, the scheme ensures improved access to irrigation. As per the Union Budget 2021-22, Rs. 11,588 crore (US$ 1.5 billion) was allocated to Pradhan Mantri Krishi Sinchai Yojana (PMKSY). As per the Union Budget 2021-22, Rs. 1.33 lakh crore (US$ 18.41 billion) was allocated to the Ministry of Agriculture. The Indian Prime Minister launched the Pradhan Mantri Kisan Samman Nidhi Yojana (PM-Kisan) and transferred Rs. 18,000 crore (US$ 2.45 billion) to bank accounts of >90 million beneficiaries on December 25, 2020. As per the Union Budget 2021-22, Rs. 65,000 crore (US$ 8.9 billion) was allocated to Pradhan Mantri Kisan Samman Nidhi (PM-Kisan). As per the Union Budget 2021-22, Rs. 8,514 crore (US$ 1.17 billion) was allocated to the Department of Agricultural Research and Education.

Prime Minister of India launched the Pradhan Mantri Kisan Samman Nidhi Yojana (PM-Kisan) Benefits under the PM Kisan plan have been delivered to about 11.78 crore farmers as of February 22, 2022, and Rs. 1.82 lakh crore (US$ 23.97 billion) have been released to qualified recipients across India in various payments.

In April 2021, the Government of India approved a PLI scheme for the food processing sector with an incentive outlay of Rs 10,900 crore (US$ 1,484 million) over a period of six years starting from FY22.

To boost farmer incomes and growth of the agricultural economy, the Indian government released funds in June 2021 for farm mechanisation such as establishment of custom hiring centres, farm machinery bank and high-tech hubs in different states.

In November 2020, Netafim India, a leading smart irrigation solutions provider, launched FlexNet, a revolutionary mainline and sub-mainline piping for above and below-ground drip irrigation systems for Indian farmers.

In September 2020, the government launched the PM Matsya Sampada Yojana, e-Gopala App and several initiatives in fisheries production, dairy, animal husbandry and agriculture. Under this scheme, an investment of Rs. 20,000 crore (US$ 2.7 billion) will be made in the next 4-5 years in 21 states.

In June 2020, Government introduced Pradhan Mantri Formalization of Micro Food Processing Enterprises (PM-FME) scheme. It is expected to generate total investment of Rs. 35,000 crore (US$ 4.97 billion), generate 9 lakh skilled and semi-skilled employment, and benefit 8 lakh units through access to information, training, better exposure, and formalization.