The Indian food processing industry accounts for 32% of the country’s total food market. This makes agriculture one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth. The two main food staples in India are rice and wheat and India is the second-largest producer of both the staples across the world. Farming makes up a large share of agriculture in the country but livestock rearing along with fishing also contributes significantly to feeding India’s population as well its economy.
Industry’s contribution to the following segments
- 19% – Share of world’s area is under bamboo cultivation
- 21% – Production of total coconut production in the world
- 30% – Horticulture contribution to GDP from agriculture
- 55% – Non-timber forest produce’s contribution to total employment in the forestry sector
The Indian agriculture sector is primarily driven by a large population and rising urban and rural disposable income. The internal demand for agriculture inputs and allied services like warehousing and cold storages is increasing at a fast pace. India is among the 15 leading exporters of agricultural products in the world. The industry’s exports reached about US$ 38.54 billion in FY19 and US$ 35.09 billion in FY20. Moreover, the agriculture export policy has set a target to increase agricultural export to over US$60 billion by 2022.
The industry has previously suffered neglect. Investment, if any, has been targeted at low-productive instruments and mistargeted subsidiaries. Minimum support prices (MSP) for crops given to farmers has failed to provide sufficient income at the hands of farmers to buy even two-time meals.
The total cultivated land area in India in FY16 was about 1.5 million hectares. India has the 10th largest arable land resource in the world. According to the World Bank, as of 2015, about 38% of the land area in India is suitable for agriculture.
Approximately 60% of India’s population works in the agriculture industry, contributing about 18% to India’s GDP. With the development in other areas of the country’s economy, this share decreases gradually each year. This decline can be attributed to the decreasing agricultural prices where most of these products are below the minimum support price. The expansion of the country’s services and manufacturing industries along with increasing urbanization has also contributed to the decreasing agricultural share.
Government plans to triple the capacity of the food processing sector in India from the current 10% of agriculture produce to 30%. It has committed about US$ 936.38 billion as investments for mega food parks in the country. It has also allowed 100% FDI in the marketing of food products and including food products in E-commerce under the automatic route.
6 schemes adopted by the ‘Make in India’ initiative to reduce wastage and benefit farmers:
- Mega food parks
- Value addition, cold chain & preservation infrastructure
- Creation of food processing and preservation capacities
- Creation of backward and forward linkages
- Food safety and quality assurance infrastructure
- Agro-processing cluster
The increased investment in agricultural infrastructures such as irrigation facilities, warehousing and cold storage will lead to better momentum in the agriculture sector. 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. According to (DPIIT), the Indian food processing industry has cumulatively attracted FDI equity inflow of about US$ 10.15 billion between April 2000 and June 2020.
Agricultural innovations will help to sustain the growing population. The industry has undergone major developments over the last century. Two factors were most responsible for this surge in productivity: engines and the widespread availability of electricity. Today, the innovations on our immediate horizon include autonomous pickers.
Over the next two decades, a technological wave will revolutionize the efficiency of farms all over the world. By the year 2050, the human population will be nearly 10 billion which means that we’ll need to have doubled the amount of food we now produce. This is putting pressure on the limited arable land available for cultivation.
Agricultural produce is the biggest resource of economic activity and development in India. Whereas the manufacturing sector will fuel growth in the urban areas, the rural segment is mostly dependent on agricultural growth. As a part of the ‘Make in India’ initiative, it is essential to aid support to this sector and invest in the production of high quality agricultural allied industries.
Organic products have a huge potential in the domestic as well as in the international market. The total organic area is about 5.71 million hectares in India. The organic food segment in India is expected to grow at a CAGR of 10% during 2015-25. It is also estimated to reach US$ 10.73 billion by 2025 from US$ 386.32 million in 2015. India can become a prominent exporter in organic products with further developments in permaculture methods of farming along with the adoption of sustainable farming practices.
There is ample opportunity in exports of organic products and agricultural innovations. Besides, the ‘Make in India’ can be achieved only if the agriculture sector also grows at a healthy rate as it enhances the income of rural dwellers. Thus, leading to equitable growth in the country. The Indian government is also aiming to double farmers’ income by 2020. The high proportion of agricultural land, diverse agro-climatic conditions encourage the cultivation of different crops in India.