Agriculture plays a vital role in India’s economy and is the principal source of income for more than 58 per cent of the country’s population. Agriculture and allied sectors (livestock, fisheries and forestry) are among the largest contributors to India’s Gross Domestic Product (16%)
India’s arable land area of 159.7 million hectares (over 60 % of land area) is the second largest in the world, after the USA. Agricultural products of significant economic value include rice, wheat, potato, tomato, onion, mangoes, sugar-cane, beans, cotton, etc.
Over the recent past, the increase in agricultural exports together with growth in household income& consumption and expansion in the food processing sector has resulted in growth in the agriculture sector in India. Rethinking on antipoverty priorities and the recent economic slowdown are among the factors that are causing a positive shift in the Indian economic policy in favour of greater support for agriculture.
The Indian agriculture sector is now moving towards another green revolution. The transformations in the sector are being induced by factors like newfound interest of the organised sector, new and improved technologies, farming became more mechanised, new markets and demands, easy credit facilities, rapid growth of contract farming, agriculture-friendly policies from the government, etc. Agriculture is now evolving from just a traditional way of life to a professionally managed industry – the agriculture industry.
Market size
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, comprising fruits, vegetables and spices was a record 283.5 million tonnes in 2014-15. 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.
According to the Department of Industrial Policy and Promotion, the Indian agricultural services and agricultural machinery sectors have cumulatively attracted Foreign Direct Investment equity inflow of about $ 2,261 million from April 2000 to December 2015.
India is the world’s second-largest producer of wheat and rice. As per the Indian Ministry of Agriculture, food grain production is estimated at 253.16 million tonnes (MT) for 2015-16 and production of pulses estimated at 17.33 million tonnes. India is the largest producer of pulses in the world. With 6.51 million tonnes of cotton in 2014-15, India beat China to become the largest producer of cotton.
With an annual output of 146.3 MT, India is the largest producer of milk, accounting for 18.5 per cent of the total world production. It also has the largest bovine population. 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.
Spice exports from India are expected to reach US$ 3 billion by 2016–17 due to creative marketing strategies, innovative packaging, strength in quality and strong distribution networks. The spices market in India is valued at Rs 40,000 crore (US$ 5.87 billion) annually, of which the branded segment accounts for 15 per cent.
Investments
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$ 2,261 million from April 2000 to December 2015.
Some major investments and developments in agriculture in the recent past are as follows:
- Agri-research institute ICRISAT’s incubation arm is looking to set up an Rs.100 crore (US$ 14.67 million) fund in a year, an initiative that could help small entrepreneurs from the agri-business and nutrition space raise money.
- Mahindra & Mahindra (M&M), India’s leading tractor and utility vehicle manufacturer, announced its entry into pulses retailing under the brand ‘NuPro’. Going forward, the company plans to foray into e-retailing and sale of dairy products.
- Fertiliser cooperative IFFCO launched a joint venture with Japanese firm Mitsubishi Corp for manufacturing agrochemicals in India.
- Rabo Equity Advisors, the private equity arm of Netherlands-based Rabo Group, raised US$ 100 million for the first close of its second fund – India Agri Business Fund II. The fund plans to invest US$ 15–17 million in 10–12 companies.
- Oman India Joint Investment Fund (OIJIF), a joint venture (JV) between the State Bank of India (SBI) and State General Reserve Fund (SGRF), invested Rs 95 crore (US$ 13.94 million) in GSP Crop Science, a Gujarat-based agrochemicals company.
- The world’s seventh-largest agrochemicals firm, Israel-based ADAMA Agrochemicals plans to invest at least US$ 50 million in India over the next three years.
Initiatives by the Government
The Government of India realizes the importance of agriculture to the development of the nation and hence has adopted several initiatives and programmes for this sector’s continuous growth. In its Budget 2016–17, government proposed measures to improve agriculture and increase farmers’ welfare such as 2.85 million hectares to be brought under irrigation, Rs 287,000 crore (US$ 42.11 billion) grant in aid to be given to gram panchayats (village councils) and municipalities and 100 per cent village electrification targeted by May 01, 2018.
Steps have been taken to improve soil fertility on a sustainable basis through the soil health card scheme and to support the organic farming scheme ‘Paramparagat Krishi Vikas Yojana’. Other steps include improved access to irrigation through ‘Pradhanmantri Gram Sinchai Yojana’; enhanced water efficiency through `Per Drop More Crop’; continued support to Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and the creation of a unified national agriculture market to boost the incomes of farmers.
India and Serbia can improve cooperation in agriculture sector based on the Agreement on Cooperation in the field of Agriculture and Allied Sectors singed signed between the two countries in March 2009
The budget placed a renewed focus on the farm sector in a bid to revive agriculture growth and improve farm incomes. Finance Minister Arun Jaitley of India said that farmers and rural India will get the government’s immediate attention and that government aims to double farm income in the next five years.
The Indian Ministry of Agriculture has inked MOUs/agreements with 63 countries including Serbia for bilateral partnerships. These agreements would provide better agricultural facilities in areas such as research and development, capacity building, post-harvest management, value addition/food processing, plant protection, animal husbandry, dairy and fisheries etc and help in enhancing bilateral trade.
Road Ahead
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.
Realizing the importance of storage infrastructure, the Indian Government plans an additional 35 million MT warehousing capacity for storage of all major crops in order to curb wastage.
India- Serbia Cooperation
India Serbia bilateral relations in the agricultural and food processing industry are mainly in the field of import of agricultural products from India such as coffee, sesame seeds, dehydrated onion etc. India also exports tractors (Mahindra, TAFE and Sonalika) as well as irrigation equipment from the brand Jain Irrigation. Mahindra and Sonalika tractors are being assembled in Serbia through their Serbian partners. Serbian exports of agricultural products are mostly tobacco and cigarettes. Agriculture & food processing and agricultural machinery are crucial industry segments in India-Serbia trade relations with good potential for trade and investment growth. Indian tractor manufacturers Mahindra & Mahindra (represented by Agropanonka), Sonalika (represented by FPM Agromehanika) and TAFE (represented by Amalgamations Group) have been regularly participating in International Agricultural Fair in Novi Sad.
The priority objective of Serbian agriculture is to increase the general level of competitiveness, find new markets, adapt to rules and standards of the EU and WTO, conquer new know-how and technologies that will change the existing structure of agriculture and be ready to meet competition on the local and international market.
India and Serbia can improve cooperation in agriculture sector based on the Agreement on Cooperation in the field of Agriculture and Allied Sectors singed signed between the two countries in March 2009. The agreement envisages the establishment of a Joint Commission which is supposed to monitor the realization of the Agreement and to propose measures for improving cooperation in Agriculture and food industry.