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Agricultural Sector of India

Agricultural Sector of India has made a lot of progress since independence in terms of growth in output, yields and area under many crops. It has gone through a green revolution, a white revolution, a yellow revolution and a blue revolution.

 

Agriculture sector continues to be the mainstay of the Indian economy. Agriculture is the only means of living for almost two-thirds of the employed class in India. India depends heavily on the agriculture sector, especially on the food production unit after the 1960 crisis in food sector. Since then, India has put a lot of effort to be self-sufficient in the food production and this endeavor of India has led to the Green Revolution. As agriculture has backward and forward linkages with other economic sectors, changes in agricultural performance have a multiplier effect on the entire economy.

Agricultural Growth

India has made a lot of progress in agriculture since independence in terms of growth in output, yields and area under many crops. It has gone through a green revolution, a white revolution, a yellow revolution and a blue revolution. India has been the world’s largest producer of milk for the last two decades and contributes 19 per cent of the world’s total milk production.

India is emerging as the export hub of instant coffee which has led to exports of coffee increase 17 per cent in calendar year 2017 to reach US$ 958.80 million. Tea exports from India reached a 36 year high of 240.68 million kgs in CY 2017.

Agricultural export constitutes 10 per cent of the country’s exports and is the fourth-largest exported principal commodity. Agricultural exports from India reached US$ 28.09 billion during April 2017-January 2018 with exports of basmati, buffalo meat reaching US$ 6.19 billion and US$ 6.59 billion, respectively. (Source : IBEF, CSO, Ministry of Commerce).

 

GDP From Agriculture in India averaged 4052.74 INR Billion from 2011 until 2018, reaching an all time high of 5666.82 INR Billion in the fourth quarter of 2017 and a record low of 2690.74 INR Billion in the third quarter of 2011.

Investment is one of the crucial factors determining the growth rate of agricultural sector. The government plays a very significant role in boosting agricultural growth through its increased investment in this field as also inducing the private investment in agriculture.

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$ 2.02 billion and US$ 466.31 million, respectively, during April 2000 to December 2017. The food processing sector attracted FDI of US$ 8.37 billion in the same period.

In January 2018, India Agri Business Fund II (IABF-II), co-sponsored by Rabobank, the UK’s CDC Group and Asian Development Bank (ADB), made an investment worth US$ 10 million for a minority stake in Global Gourmet Pvt Ltd, a frozen food products exporting company.

Challenges Still Existing

Due to intensive involvement of labour in different farm operations, the cost of production of many crops is quite high. Human power availability in agriculture also increased from about 0.043KW/ ha in 1960-61 to about 0.077 KW/ ha in 2014-15. However, as compared to tractor growth, increase in human power in agriculture is quite slow.

There is a need to innovate custom service or a rental model by institutionalisation for high cost farm machinery such as combine harvester, sugarcane harvester, potato combine, paddy transplanter, laser guided land leveller, rotavator etc. to reduce the cost of operation and it can be adopted by private players or state or central organisation in major production hubs.

According to the World Bank estimates, half of the Indian population would be urban by the year 2050. It is estimated that percentage of agricultural workers in total work force would drop to 25.7 per cent by 2050 from 58.2 per cent in 2001. Thus, there is a need to enhance the level of farm mechanization in the country.

India has the capacity to produce the food grains which can make vast difference in Indian Economy. To achieve targeted mark by the government it needs to provide support in case of land, bank loans and other machinery to the small farmers along with the big farmers with this we can expect some improvement in Indian economy.

Irrigation is the most important agricultural input in a tropical monsoon country like India where rainfall is uncertain, unreliable and erratic India cannot achieve sustained progress in agriculture unless and until more than half of the cropped area is brought under assured irrigation.

Government Reforms

 Economic Survey indicated that the government was keen on doubling farmers’ income by 2022, for which it has launched several new initiatives that encompass activities from seed to marketing.
Credit from institutional sources will complement all such government initiatives like Soil Health Card, Input Management, Per Drop More Crop in Pradhan Mantri Krishi Sinchai Yojana (PMKSY), PMFBY, e-Nam, etc, the survey said.
The Economic Survey has pointed that flagship project Jalyukta Shivar has yielded positive results and would be continued to make the remaining 6,000 villages out of a total 25,000 drought-free by 2019. In 2016-17, 5,291 villages were made water neutral with 1.51 lakh works with expenditure of Rs 2,235 crore. Whereas, the first phase of farm ponds with target of 1,12,311 has seen completion of 60,496 farm ponds.

With small and marginal farmers accounting for 78 per cent of the total 1.36 crore farmers, the state government has decided to extend the group farming projects across 40,913 villages. A group of 20 farmers with cumulative land holding not exceeding 100 acres would be provided subsidies up to Rs 1 crore for group farming.

According to the World Bank estimates, half of the Indian population would be urban by the year 2050. It is estimated that percentage of agricultural workers in total work force would drop to 25.7 per cent by 2050 from 58.2 per cent in 2001. Thus, there is a need to enhance the level of farm mechanisation in the country.

References : IBEF, Economic Times News Articles, Indian Express News Articles, tradingeconomies.com, CSO

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Ease of Doing Business in India State Rankings: Andhra, Telangana, Haryana ranked as Top Three States

The rankings, jointly prepared by the World Bank and DIPP, serve as a check-list of sorts for evaluating states on a 340-point Business Reform Action Plan, between the period of July, 2016 and July, 2018.

 

Andhra Pradesh has topped the government’s ease of doing business index for states, ahead of the industrialized states such as Gujarat, Maharashtra and Tamil Nadu.

The topping southern state was followed by Telangana and Haryana which grabbed the second and third spots respectively, according to the third edition of Department of Industrial Policy and Promotion’s (DIPP’s) Business Reforms Action Plan, 2017.

The final rankings were arrived at after a combination of “reform evidence score” and “feedback score”.

The highlights were the states of Jharkhand and Telangana who scored a 100.00% score in their reform evidence scores.

Jharkhand, which is home to several steel plants as well as coal and iron ore mines, clocked 100 percent in the “reform evidence scorecard,”

The “reform evidence score” is allotted on the basis of 372 recommendations for reforms on regulatory processes, policies, practices and procedures spread across 12 reform areas.

In this year’s edition of rankings, DIPP carried out a comprehensive business-to-government (B2G) feedback exercise, where feedback was taken from businesses on the quality of implementation of the reforms claimed by the states.

Business in India

The idea behind ranking states is to induce competition to attract investment and improve the business climate. In addition, these rankings indicate that the states have the potential to attract business and undertake various reforms that are being undertaken by the Centre.

In 2016, Telangana and Andhra Pradesh jointly emerged as number one states to do business in India, ahead of Gujarat – Prime Minister Narendra Modi’s home state – that was number one in 2015.

The report has thrown up surprising results with Maharashtra, often touted as India’s most industrialized state – led by the bustling financial capital of Mumbai – ranked 13th with a reform evidence score of 97.29 percent and a “feedback score” of 50.29%. Similarly, despite being an industrial hub, the southernmost state Tamil Nadu clocked 15th rank, with a “reform evidence score” of 95.93 percent and a feedback score of 43.90%. Both the states were listed as achievers in the ranking.

The national capital Delhi’s score deteriorated to 33.99 percent, from 47 percent in 2016 and it stood at the 23rd spot in this year’s rankings. (See Full Rankings)

North-eastern states except Assam continue to remain at the bottom of the heap, underlining the urgency of immediate policy interventions to turn these states into business-friendly destinations.

The rankings, jointly prepared by the World Bank and DIPP, serve as a check-list of sorts for evaluating states on a 340-point Business Reform Action Plan, between the period of July, 2016 and July, 2018.

The latest listing of the states comes days before the World Bank’s annual Ease of Doing Business report, 2017. Last year, India leapfrogged to the 100th rank in the Doing Business rankings for 2016, jumping 30 notches from a year ago, in an endorsement of the string of reforms implemented by the Narendra Modi government.

Source: The article is taken from moneycontrol.com

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Food Processing Industry in India

The Food Processing Industry is experiencing unparalleled growth fuelled by the growing food demands of Indian population and exciting opportunities in the retail sector.

Backed by favourable government policies and fiscal incentives; the industry has beckoned keen interest among global investors. The Food Processing Industry recorded foreign direct investment inflows of USD 727 million in FY17 up 43% from the previous fiscal.

FDI Inflows

Recent Investments:

May 2018 - Future Group plans to infuse USD 51.8 million to open 140 exclusive FBB outlets aiming to double turnover in two years.

February 2018 – Amazon-the first foreign e-commerce company to have entered the food retail market in India stocks and sell food items directly to consumers.

February 2018 – The Food Processing Park at Vinchur in Nashik attracts an investment of USD 150 million, expecting to generate 5,400 jobs. During the ‘Magnetic Maharashtra’, global investors’ summit 15 food processing units signed MoUs with the state government.

January 2018 - Lulu Group – a UAE based company signed a MoU to invest USD 400 million in the retail and food processing industry in Telangana.

November 2017 - ITC is investing over USD 1.55 billion in food processing and logistics facilities, PepsiCo, along with its partners, looking to invest USD 2 billion in the next 5 years. Hershey Co is planning to invest USD 50 million in the next 5 years.

Industry Figures at a Glance

The size of the processed food market in 2016 was USD 322 billion. This figure is expected to touch USD 543 billion by 2020 growing at a CAGR of 14.6%.

By 2020, the food processing industry is likely to attract investments of the order of USD 33 billion. Food Retail business will soar to USD 482 billion. Dairy segment is expected to contribute by doubling to USD 140 billion. Indian household consumption is likely to treble making India the 5th largest consumer by 2030.

major food categories in food processing

By 2020, the food processing industry is likely to attract investments of the order of USD 33 billion. Food Retail business will soar to USD 482 billion. Dairy segment is expected to contribute by doubling to USD 140 billion. Indian household consumption is likely to treble making India the 5th largest consumer by 2030.

What’s driving this growth?

  • 3 billion Consumer base with a strong preference for branded food
  • India is the largest producer of several agri products
  • Favourable regulatory environment and policies
  • Robust supply chain and logistics infrastructure
Frozen-Food-Manufacturers
food-processing

Infrastructure Investments: India has a robust infrastructure with 12 Mega Food Parks and another 42 planned with a total project cost of USD 2.3 billion. The Food Parks aim to link agri-produce to the market to maximize value to the farmers by minimizing wastage and generating employment. Mega Food Parks consist of collection center, primary processing centers, central processing centers, cold chains and plots for setting up food processing units.

FDI Regulation: 100% FDI is permitted under the automatic route in food processing industries. 100% FDI is allowed through government approval route for trading, including through e-commerce in respect of food products manufactured or produced in India.

Favourable Government Policies:

  • Dairy Processing & Infrastructure Development Fund (DIDF) plans to spend Rs 10,881 crore during the period from 2017-18 to 2028-29 to build an efficient milk procurement system by setting up of chilling infrastructure & installation of electronic milk adulteration testing equipment, creation/modernization/expansion of processing infrastructure and manufacturing faculties for Value Added Products for the Milk Unions/ Milk Producer Companies.

  • Pradhan Mantri Kisan Sampada Yojna (PMKSY) — Allocation has been increased from USD 110 million in RE 2017-18 to USD 215.2 million in RE 2018-19.

  • Tomato, Onion and Potato processing- Operation Green has been launched to promote FPOs, agro logistics, processing facilities and professional management with a sum of USD 76.9 million.
  • State of the Art Testing facility would be set up at 42 Mega Food Park to promote Agri export from current USD 30 billion to USD 100 billion.
  • Corporate Income Tax has been reduced from 30% - 25% to companies having annual turnover up to USD 38.5 million for all sectors.