Agriculture Sector in India
Agriculture Sector in India
Indian Agri exports is likely to reach US$ 60 billion by 2022.
Essential agricultural commodities export for April-September 2020
increased by 43% as compared to same period last year to Rs. 53,626
crore.
Agriculture is the primary source of livelihood for about 58% of
India’s population. Gross Value Added by agriculture, forestry, and
fishing was estimated at Rs. 19.48 lakh crore in FY20. Share of
agriculture and allied sectors in gross value added (GVA) of India
at current prices stood at 17.8 % in FY20. Consumer spending in
India will return to growth in 2021 post the pandemic-led
contraction, expanding by as much as 6.6%.
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. Indian food and grocery market is the world’s
sixth largest, with retail contributing 70% of the sales. The Indian
food processing industry accounts for 32% 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.
Principal agricultural commodities export for April 2020 - January
2021 was US$ 32.12 billion.
The Economic Survey of India 2020-21 report stated that in FY20,
the total food grain production in the country was recorded at
296.65 million tonnes—up by 11.44 million tonnes compared with
285.21 million tonnes in FY19. The government has set a target to
buy 42.74 million tonnes from the central pool in FY21; this is 10%
more than the quantity purchased in FY20. For FY22, the government
has set a record target for farmers to raise food grain production
by 2% with 307.31 million tonnes of food grains. In FY21, production
was recorded at 303.34 million tonnes against a target of 301
million tonnes.
Production of horticulture crops in India was estimated at a record
326.6 million metric tonnes (MMT) in FY20 as per third advance
estimates, an increase of 5.81 million metric tonnes over FY20.
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. Area under
horticulture is projected to rise by 2.7% in FY21.
Sugar production in India reached 26.46 MT between October 2019 and
May 2020 sugar season according to Indian Sugar Mills Association
(ISMA).
India is among the 15 leading exporters of agricultural products in
the world. Agricultural export from India reached US$ 38.54 billion
in FY19 and US$ 35.09 billion in FY20.
The organic food segment in India is expected to grow at a CAGR of
10% during 2015-25 and is estimated to reach Rs. 75,000 crore by
2025 from Rs. 2,700 crore in 2015.
The processed food market in India is expected to grow to Rs.
3,451,352.5 crore by 2025, from Rs. 1,931,288.7 crore in FY20 on the
back of government initiatives such as planned infrastructure worth
US$ 1 trillion and Pradhan Mantri Kisan Sampada Yojna. The food
processing industry employs about 1.77 million people. The sector
allows 100% FDI under the automatic route.
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$
10.24 billion between April 2000 and December 2020.
In March 2020, Fact, the oldest large scale fertilizer manufacturer
in the country, crossed one million production and sales mark.
Nestle India will 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 were launched in October
2019.
Investment worth Rs. 8,500 crore (US$ 1.19 billion) have been
announced in India for ethanol production.
Some of the recent major Government initiatives in the sector are
as follows:
As per Union Budget 2021-22, Rs. 4,000 crore was allocated towards
implementing Pradhan Mantri Krishi Sinchayee Yojana
(PMKSY-PDMC).
The Ministry of Food Processing has been allocated Rs. 1,308.66
crore in the Union Budget 2021-22.
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 over a period of six years starting from FY22.
In November 2020, the government inaugurated a mega food park in
Punjab worth Rs. 107.83 crores that will be spread across over 55
acres of land.
In October 2020, the Tribal Cooperative Marketing Development
Federation of India (TRIFED) included 100 new Forest Fresh Organic
Products sourced from tribes across India on its e-marketplace.
In October 2020, Agri-lender Nabard (National Bank for Agriculture
and Rural Development) proposed plans to set up a subsidiary to
provide guarantee for loans under agriculture and rural
development.
In October 2020, the government announced that it is putting up a
common data infrastructure for farmers in the country. PMFBY
(Pradhan Mantri Fasal Bima Yojana), PM-Kisan and the Soil Health
Card will be integrated through a common database, along with land
record details.
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 will be made in the next
4-5 years in 21 states.
In May 2020, Government announced the launch of animal husbandry
infrastructure development fund of Rs. 15,000 crore.
In September 2019, Prime Minister, Mr Narendra Modi launched
National Animal Disease Control Programme (NADCP), expected to
eradicate foot and mouth disease (FMD) and brucellosis in livestock.
In May 2020, Rs. 13,343 crore was allocated to the scheme.
The Government of India came out with 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 the Government
of India in December 2018. The new policy aimed to increase India’s
agricultural export 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 for
computerization of Primary Agricultural Credit Society (PACS) to
ensure cooperatives are benefitted through digital technology.
The Government of India launched the Pradhan Mantri Krishi Sinchai
Yojana (PMKSY) with an investment of Rs. 50,000 crore aimed at
development of irrigation sources for providing a permanent solution
from drought.
Government plans to triple the capacity of food processing sector
in India from the current 10% of agriculture produce and has also
committed Rs. 6,000 crore 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% FDI in marketing of food
products and in food product E-commerce under the automatic
route.
Paddy procurement in Kharif Marketing Season (KMS) 2020-21 until
January 10, 2020, reached over 534.44 lakh metric tonnes (LMT), an
increase of 26.24% against the last year corresponding purchase of
423.35 LMT.
In November 2020, the planting of winter crops exceeded by 10%
compared with the last year and witnessed 28% increase in area under
pulses. The total area acreage under pulses increased to 8.25
million hectares from 6.45 million hectares last year.
Out of the total 37 mega food parks that were sanctioned, 22 mega
food parks are operational, as of January 2021.
In November 2020, Minister of Consumer Affairs, Food and Public
Distribution, Mr. Piyush Goyal announced that the Food Cooperation
of India and state agencies are set to procure a record quantity of
742 LMT (lakh metric tonnes) paddy during the ongoing Kharif crop
season as against 627 LMT paddy last year.
The Electronic National Agriculture Market (e-NAM) was launched in
April 2016 to create a unified national market for agricultural
commodities by networking existing APMCs. It had 16.9 million
farmers and 157,778 traders registered on its platform until
February 2021. Over 1,000 mandis in India are already linked to
e-NAM and 22,000 additional mandis are expected to be linked by
2021-22.
Sale of tractors in the country stood at 880,048 units in 2020 with
the export of 77,378 units.
The total agricultural exports stood at US$ 37.31 billion between
April 2020 and February 2021.
Wheat and Other Cereals: 727% from Rs. 3,708 crore to Rs. 5,860
crore Non-Basmati Rice: 132% from Rs. 13,130 crore to Rs. 30,277
crore, Soya Meal: 132% from Rs. 3,087 crore to Rs. 7,224 crore.
Raw Cotton: 68% from Rs. 6,771 crore to Rs. 11,373 crore, Sugar:
39.6% from Rs. 12,226 crore to Rs. 17,072 crore, Spices: 11.5% from
Rs. 23,562 crore to Rs. 26,257 crore.
During FY20 (till February 2020), tea export stood at US$ 709.28
million. Coffee export stood at US$ 742.05 million in FY20.
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
investment 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 effort of scientists to get
early maturing varieties of pulses and the increase in minimum
support price.
In the next five years, the central government will aim US$ 9
billion in investments in the fisheries sector under PM Matsya
Sampada Yojana. The government is targeting to raise fish production
to 220 lakh tonnes by 2024-25.
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 export from India is likely to reach the target
of US$ 60 billion by the year 2022.
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