India’s Agrarian Growth On 70th Independence: A Preview

India has consistently progressed on agriculture front. However, there are certain things which are still making the sector tough to compete in international market. There remain many more milestones to achieve for the Indian agricultural sector.

Expected Market Size

India's Gross Domestic Productivity (GDP) is expected to grow at 7.1 per cent in Financial Year (FY) 2016-17. It is believed to be led by growth in private consumption, while GDP of agriculture is expected to grow beyond the old trend and could grow at 4.1 per cent to reach at Rs 1.11 trillion. As per the second advance estimates, India's food grain production is expected to be 271.98 million metric tonne (MMT) in 2016-17. The critical projection is, the expected production of pulses is estimated at 22.14 MMT. A continuous low rainfall similar to drought like conditions did not let the production fall miserably. This gave a boost to believe of better agricultural yields in low rainfall both within farmers and the new union government.

Wheat production in India is expected to touch an all-time high of 96.6 MT during 2016-17.

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, due to the expected 70 per cent increase in the crop size with good rainfall.

India’s groundnut exports rose to 653,240 MT during April 2016-February 2017. India’s export of grapes to Europe and China has been expected to increase by 10 to 20 per cent this year on speculation of higher production on the account of good monsoon and higher demand, due to competitors such as Chile shifting focus to US market.

Spices exports from India had grown by nine per cent in volume and five per cent in value year-on-year (YOY) to 660,975 tonnes and 1.87 billion US dollar respectively, during April-December 2016.

Few Major Milestones

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 2,315.33 million US dollar from April 2000 to December 2016.

One can also get a hint of major agricultural investments by India in 70th year of independence-

1. India and Brazil have signed a bilateral investment agreement, aimed at enhancing cooperation in areas of agriculture, cattle genomics, ship building, pharmaceuticals, defence production, ethanol production and oil and gas, between the countries.

2. Zephyr Peacock, the India-focused private equity fund of US-based Zephyr Management, has invested an undisclosed amount in Bengaluru-based potato seeds firm Utkal Tubers India Pvt Ltd, which will be used to produce high-quality mini-tubers in a tissue culture laboratory and multiply them in its own development farms and through supervised contract farming in different regions of the country.

3. Mahindra Agri Solutions Ltd (MASL), a unit of Mahindra & Mahindra Ltd, has agreed to purchase 60 per cent stake in OFD Holding BV, a Netherlands-based fruit distribution company, for Rs 36 crore (EUR 5 million), which will provide MASL access to European and Chinese markets for Indian grapes.

4. United Phosphorus Ltd had joined elite group of world’s 10 largest agro-chemical suppliers group.

5. Tea Board of India has started looking for export options at South American Continent, a region with one of the highest tea servings per person per day in the world.

6. Food and Agriculture Organisation of United Nations had termed India as milk bowl of the world.

7. India signed water conservation agreement with Netherlands and smart agriculture extension memorandum of understanding with Israel.

8. India joins the group of largest sugar producers of the world.

9. Union government had drafted a new Agriculture Production and Livestock Marketing Act which has been said to remove flaws of APMC act and agriculture may soon be given industry status ( commerce minister had given hint)

(With inputs from Ministry of Agriculture, India Brand Equity Foundation and NHB)