Agriculture in India: Information About Indian Agriculture & Its Importance

Introduction

Agriculture is the primary source of livelihood for about 58 per cent of India’s population. Gross Value Added by agriculture, forestry and fishing is estimated at Rs 18.55 lakh crore (US$ 265.51 billion) in FY19(PE). Growth in Gross Value Added (GVA) by agriculture and allied sectors stood at 2.1 per cent in H1 2019-20.

The Indian food industry is poised for huge growth, increasing its contribution to world food trade every year due to its immense potential for value addition, particularly within the food processing industry. The Indian food and grocery market are the world’s sixth largest, with retail contributing 70 per cent of the sales. The Indian food processing industry accounts for 32 per cent of the country’s total food market, one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth. It contributes around 8.80 and 8.39 per cent of Gross Value Added (GVA) in Manufacturing and Agriculture respectively, 13 per cent of India’s exports and six per cent of total industrial investment.

Market Size

During 2018-19* crop year, food grain production is estimated at record 283.37 million tonnes. In 2019-20, Government of India is targeting foodgrain production of 291.1 million tonnes. As of November 2019, total area sown with rabi crops in India reached 95.35 million hectares.

India is the second largest fruit producer in the world. Production of horticulture crops is estimated at record 313.9 million metric tonne (MMT) in 2018-19 as per third advance estimates. Milk production in the country stood at 187.7 million tonnes in 2018-19, registering a growth of 6.5 per cent. Milk processing capacity is expected to double from 53.5 million MT to 108 million MT by 2025.

Total agricultural exports from India grew at a CAGR of 14.61 per cent over FY10-19 to reach US$ 38.54 billion in FY19. In FY20 (till November 2019) agriculture exports were US$ 22.69 billion.

The organic food segment in India is expected to grow at a CAGR of 10 per cent during the period 2016-21 and reach Rs 75,000 crore (US$ 10.73 billion) mark by 2025 from Rs 2,700 crore (US$ 386.32 million) in 2015.

Investments

According to the Department for Promotion of Industry and Internal Trade (DPIIT), the Indian food processing industry has cumulatively attracted Foreign Direct Investment (FDI) equity inflow of about US$ 9.78 billion between April 2000 and December 2019.

Some major investments and developments in agriculture are as follows:

• In March 2020, Fact, the oldest large-scale fertiliser manufacturer in the country, crossed one million production and sales mark.
• Nestle India to invest Rs 700 crore (US$ 100.16 million) in construction of its ninth factory in Gujarat.
• In November 2019, Haldiram entered into an agreement for Amazon's global selling program to e-tail its delicacies in the United States.
• In November 2019, Coca-Cola launched ‘Rani Float’, fruit juices to step out of its trademark fizzy drinks.
• Two diagnostic kits developed by Indian Council of Agricultural Research (ICAR) - Indian Veterinary Research Institute (IVRI) and the Japanese Encephalitis lgM ELISA launched in October 2019.

• Investments worth Rs 8,500 crore (US$ 1.19 billion) have been announced in India for ethanol production.
• The first mega food park in Rajasthan was inaugurated in March 2018.
• Agrifood start-ups in India received funding of US$ 1.66 billion between 2013-17 in 558 deals.

Government Initiatives

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

• In September 2019, Prime Minister, Mr Narendra Modi launched the National Animal Disease Control Programme (NADCP), expected to eradicate foot and mouth disease (FMD) and brucellosis in livestock.
• In May 2019, NABARD announced an investment of Rs 700 crore (US$ 100 million) venture capital fund for equity investments in agriculture and rural-focused start-ups
• As per the Ministry of Agriculture, during 2019-20, Rs 1.50 crore (0.21 million) has been allocated to state of Andaman and Nicobar as a central share for implementation of per drop more crop component of Pradhan Mantri Krishi Sinchai Yojana (PMKSY).
• Under Budget 2019-20, Pradhan Mantri Samman Nidhi Yojana was introduced under which a minimum fixed pension of Rs 3000 (US$ 42.92) to be provided to the eligible small and marginal farmers, subject to certain exclusion clauses, on attaining the age of 60 years.

• The Government of India has come out with the Transport and Marketing Assistance (TMA) scheme to provide financial assistance for transport and marketing of agriculture products in order to boost agriculture exports.
• The Agriculture Export Policy, 2018 was approved by Government of India in December 2018. The new policy aims to increase India’s agricultural exports to US$ 60 billion by 2022 and US$ 100 billion in the next few years with a stable trade policy regime.
• The Government of India is going to provide Rs 2,000 crore (US$ 306.29 million) for computerization of Primary Agricultural Credit Society (PACS) to ensure cooperatives are benefitted through digital technology.
• With an aim to boost innovation and entrepreneurship in agriculture, the Government of India is introducing a new AGRI-UDAAN programme to mentor start-ups and to enable them to connect with potential investors.
• The Government of India has launched the Pradhan Mantri Krishi Sinchai Yojana (PMKSY) with an investment of Rs 50,000 crore (US$ 7.7 billion) aimed at development of irrigation sources for providing a permanent solution from drought.
• The Government of India plans to triple the capacity of food processing sector in India from the current 10 per cent of agriculture produce and has also committed Rs 6,000 crore (US$ 936.38 billion) as investments for mega food parks in the country, as a part of the Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters (SAMPADA).
• The Government of India has allowed 100 per cent FDI in marketing of food products and in food product e-commerce under the automatic route.

Achievements in the sector

• India’s sugar exports are estimated to cross 5 million tonne (MT) in the current marketing year ending September 2020.
• Foreign direct investments (FDI) in India's food processing sector is stood at US$ 628.24 million in 2018-19.

• Sugar production in India has reached 33.16 million tonnes (MT) in 2018-19 sugar season and is expected to produce 26.85 MT in 2019-20, according to the Indian Sugar Mills Association (ISMA).
• The Electronic National Agriculture Market (eNAM) was launched in April 2016 to create a unified national market for agricultural commodities by networking existing APMCs. Up to May 2018, 9.87 million farmers, 109,725 traders were registered on the e-NAM platform. 585 mandis in India have been linked while 415 additional mandis will be linked in 2018-19 and 2019-20.
• Agriculture storage capacity in India increased at 4 per cent CAGR between 2014-17 to reach 131.8 million metric tonnes.
• Coffee exports stood at 286.95 million tonnes in FY20 (April-September’19).
• Between 2014-18, 10,000 clusters were approved under the Paramparagat Krishi Vikas Yojana (PKVY).

Road Ahead

India is expected to achieve the ambitious goal of doubling farm income by 2022. 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. Furthermore, the growing use of genetically modified crops will likely improve the yield for Indian farmers. India is expected to be self-sufficient in pulses in the coming few years due to concerted efforts of scientists to get early-maturing varieties of pulses and the increase in minimum support price.

Going forward, the adoption of food safety and quality assurance mechanisms such as Total Quality Management (TQM) including ISO 9000, ISO 22000, Hazard Analysis and Critical Control Points (HACCP), Good Manufacturing Practices (GMP) and Good Hygienic Practices (GHP) by the food processing industry will offer several benefits. The agri exports from India are likely to reach the target of US$ 60 billion by the year 2022.

References:  Agricultural and Processed Food Products Export Development Authority (APEDA), Department of Commerce and Industry, Union Budget 2020-21, Press Information Bureau, Ministry of Statistics and Programme Implementation, Press Releases, Media Reports, Ministry of Agriculture and Farmers Welfare, Crisil

*as per 4th advance estimates, PE- Provisional Estimates

Note: Conversion rate used as on January 2020, Re 1 = US$ 0.01402

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