Last Updated: March 21, 2017
Managing Partner, Unitus Seed Fund
Last Updated: March, 2017
Sectoral Report | February, 2017
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 the first advanced estimates by the Central Statistics Office (CSO), the share of agriculture and allied sectors (including agriculture, livestock, forestry and fishery) is expected to be 17 per cent of the Gross Value Added (GVA) during 2016-17 at 2011-12 prices.
India is the largest producer, consumer and exporter of spices and spice products. India's fruit production has grown faster than vegetables, making it the second largest fruit producer in the world. India's horticulture output, is estimated to be 287.3 million tonnes (MT) in 2016-17 after the first advance estimate. 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.
India's gross domestic product (GDP) is expected to grow at 7.1 per cent in FY 2016-17, led by growth in private consumption, while agriculture GDP is expected to grow above-trend at 4.1 per cent to Rs 1.11 trillion (US$ 1,640 billion), according to Central Statistics Office (CSO).
As per the 1st Advance Estimates, India's food grain production is expected to be 135.03 million tonnes in 2016-17. Production of pulses is estimated at 8.70 million tonnes. 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.
Groundnut exports from India are expected to cross 700,000 tonnes during FY 2016-17 as compared to 537,888 tonnes during FY 2015-16, owing to the expected 70 per cent increase in the crop size due to good monsoons. India’s export of grapes to Europe and China are expected to increase by 10 to 20 per cent this year on back of higher production on account of good monsoon and higher demand due to competitors such as Chile shifting focus to US market. Spices exports from India grew by 5 per cent in volume and 7 per cent in value year-on-year to 4,37,360 tonnes valued at Rs 84.2 billion (US$ 1.24 billion) respectively during April-September 2016, according to the Spices Board of India.
Indian agrochemical industry is expected to grow at 7.5 per cent annually to reach US$ 6.3 billion by 2020 with domestic demand growing at 6.5 per cent per annum and export demand at 9 per cent per annum.*
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$ 2,299.83 million from April 2000 to September 2016.
Some major investments and developments in agriculture in the recent past are as follows:
Given the importance of the agriculture sector, the Government of India, in its Budget 2017–18, planned several steps for the sustainable development of agriculture-
Some of the recent major government initiatives in the sector are as follows:
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.
Exchange rate used: INR 1 = US$ 0.015 as of February 8, 2017
References: The Economic Survey 2016–17, Agricultural and Processed Food Products Export Development Authority (APEDA), Department of Commerce and Industry, Union Budget 2017–18, Press Information Bureau, Ministry of Statistics and Programme Implementation, Press Releases, Media Reports
Note: * - as per a report jointly presented by Tata Strategic Management Group (TSMG) and FICCI,
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
Last Updated: March 21, 2017
Managing Partner, Unitus Seed Fund
India exported nearly 20 million tonnes of foodgrain in 2012-2013, becoming a major contributor to the world's food basket.
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