This document provides an overview of a seminar on foreign direct investment in Indian agriculture. The seminar objectives are to understand the current scenario of the Indian agriculture sector, analyze FDI inflow trends from 2000-2015, and study opportunities and challenges of FDI in Indian agriculture. Key topics covered include the size and growth drivers of Indian agriculture, regulations around FDI, sectors attracting the highest FDI, top investing countries, existing foreign-India partnerships, and future opportunities and challenges of FDI in the sector.

1. MASTER SEMINAR
ON
FOREIGN DIRECT INVESTMENT IN INDIAN
AGRICULTURE
PRESENTED BY:
SANDEEP JAYARA
PGP-I
20-Apr-17

2. KEY FEATURES
INDIAN AGRICULTURE OVERVIEW
MARKET SIZE OF INDIAN AGRICULTURE
GROWTH DRIVERS OF INDIAN AGRICULTURE
FOREIGN DIRECT INVESTMENT: MEANING
HISTORY OF FDI
REGULATION OF FDI FORMATION
FDI POLICY IN INDIAN AGRICULTURE
FACTS AND FIGURES RELATED TO FDI
OPPORTUNITIES & CHALLENGES
FUTURE GROWTH
REFERENCE
220-Apr-17

3. OBJECTIVES
• To understand the current scenario of Indian agriculture sector
• To analyze the trends of FDI inflow in agricultural sector during 2000-01 to 2015-16 (up
to December 2015)
• To study the opportunities and challenges of FDI in Indian agricultural sector
320-Apr-17

4. INTRODUCTION
• Over 58 per cent of the rural households depend on agriculture as their principal means of livelihood.
As per the first advanced estimates by the central statistics office (CSO), the share of agriculture and
allied sectors is expected to be 17 per cent of the gross value added (GVA) during 2016-17 at 2011-
12 prices.
• At 157.35 million hectares, India holds the second largest agricultural land in the world. With 20 agro-
climatic regions, all 15 major climates in the world exist in India.
• Individual share of agriculture:
• Commodities Rank output (2016-2017)
• Cereals( Rice and wheat)- 2nd 253.16(MT)
• Fruits and vegetables- 2nd 287.3 (MT)
• Milk and derivatives- 2nd 146.3 (Mt)
• Spices and pulses- 1st 8.70 (MT)
420-Apr-17

5. • The government plans to revamp the old model agriculture produce marketing
committee act (APMC act) and carve out the provisions on contract farming into a
separate law to form a new contract farming act.
• Minimum wage for unskilled agricultural labor in c-class towns in central sphere has
been fixed at us$ 5.28 (rs 350) per day by the government, effective from November
2016.
• The government of India has introduced several projects to assist the agriculture sector.
They are pradhanmantri gram sinchai yojana: the scheme aims to irrigate the field of
every farmer and improving water use efficiency to achieve the motto `per drop more
crop’. Overall the scheme ensures improved access to irrigation.
• Paramparagat krishi vikas yojana (pkvy): the scheme aims to motivate groups of farmers
to take up organic farming.
520-Apr-17

6. MARKET SIZE OF INDIAN AGRICULTURE
• According to central statistics office (CSO), India`s agriculture GDP is expected to grow
above-trend at 4.1 per cent to rs.1.11 trillion (US$ 1,640 billion).
• Groundnut exports from India is expected to cross 700,000 tones during fY 2016-17 as
compared to 537,888 tones during FY 2015-16, owing to the expected 70 per cent
increase in the crop size due to good monsoons.
• Indian agrochemical industry is expected to grow at 7.5 per cent annually to reach US$
6.3 billion by 2020 with domestic demand growing at 6.5 per cent per annum and export
demand at 9 per cent per annum.
• 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.
620-Apr-17

7. GROWTH DRIVERS OF INDIAN AGRICULTURE
Growth
drivers
Deman
d side
driver
Policy
Support
driver
Supply
Side
Driver
• Population and
income growth
• Increasing export
• Favorable
demographics
• Hybrid and
genetically modified
seeds
• Mechanization
• Irrigation facilities
• Green revolution in
Eastern India • Growth institutional
credit
• Increasing MSPs
• New schemes
introduction
• Export import of
cereals
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8. FOREIGN DIRECT INVESTMENT
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9. HISTORY OF FDI
1997 2006 2008 2011 2017
FDI Up To 51% Allowed
With Prior Government
Approval In
‘Single Brand Retail’
FDI Up To 100% Allowed
Under The Automatic
Route In Cash & Carry
(Wholesale)
Government Mulled Over
The Idea Of Allowing 100%
FDI In Single-brand Retail
And 50% In Multi Brand
Retail
Government Allowed
51% FDI In Multi Brand
Retail And 100% FDI In
Single Brand Retail
Abolition of FIPB in
order to further
liberalize FDI
policy
920-Apr-17

10. BACKGROUND: INDIA TRANSFORMED
YESTERDAY!!!
• Slow growth rate
• Quality employment is not existing
 Small consumer markets
 Weak infrastructure
TODAY!!!
• Quality employment
 Growing consumerism
 Encouraging foreign investment
• Infrastructure development
1020-Apr-17

11. FDI POLICY IN AGRICULTURE SECTOR
• The main governing bodies that define the future role of agriculture in India are the ministry
of agriculture, the ministry of rural infrastructure and the planning commission of India.
• It aims at developing agricultural sector of India. The latest developments in FDI in Indian
agriculture sector are as follows FDI up to 100% is permitted under the automatic route in
activities such as development of seeds, animal husbandry, pisciculture, cultivation of
vegetables and mushrooms etc under controlled conditions and services related to agro
and allied sectors.
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12. REGULATION OF FDI FORMATION
Automatic Approval by RBI
• The automatic route stands for less restricted or more liberalized regulation. Under the
automatic route, the foreign investor or the Indian company does not require any
approval from the reserve bank or government of India for the investment. The approval
route FDI is allowable in all sectors and activities specified under the consolidated FDI
policy.
• Investments in high priority industries or for trading companies primarily engaged in
exporting are given almost automatic approval by the RBI.
• The normal processing time of approval is within two weeks.
1220-Apr-17

13. REGULATION OF FDI FORMATION
THE FIPB ROUTE – PROCESSING OF NON-AUTOMATIC APPROVAL CASES
• FIPB stands for foreign investment promotion board which approves all other cases where the
parameters of automatic approval are not met.
• Normal processing time is 4 to 6 weeks.
• Its approach is liberal for all sectors and all types of proposals, and rejections are few.
• It is not necessary for foreign investors to have a local partner, even when the foreign investor
wishes to hold less than the entire equity of the company.
• The portion of the equity not proposed to be held by the foreign investor can be offered to the
public.
1320-Apr-17

14. SECTORS ATTRACTING HIGHEST FDI EQUITY
FDI inflows
in
Auxiliary
Sectors
FDI inflows in
Agriculture
Services
and Machinery
FDI inflows
in
Fertilizer
FDI inflows in
Food
Processing
Industries
FDI in
Indian
Agriculture
1420-Apr-17

15. FDI INFLOWS IN AGRICULTURAL SERVICES AND
MACHINERY:
Name of Sector FDI Inflows (Crore) FDI Inflows in (US $
million)
Percentage Share in
Total Investment
Agriculture Services 9235.50 1838.37 0.66
Agriculture
Machinery
2184.74 422.96 0.15
Source: Department of Industrial Policy & Promotion, Ministry of Commerce & Industry
(April 2000 - December 2015)
1520-Apr-17

16. FDI INFLOWS TO FERTILIZERS INDUSTRY IN INDIA:
• The government of India has allowed foreign direct investment in the fertilizers industry of
the country. Foreign direct investment (FDI) in fertilizers in India is allowed up to 100%
under the automatic route in India.
Name of Sector FDI Inflows (Crores) FDI Inflows in (US $
million)
Percentage Share in
Total Investment
Fertilizer 2993.00 554.83 0.20
Source: Department of Industrial Policy & Promotion, Ministry of Commerce & Industry
(April 2000 - December 2015)
1620-Apr-17

17. FDI INFLOWS TO FOOD PROCESSING INDUSTRIES
• Government of India gave an estimation of FDI inflows to reach USD 6695.26 million by
december 2015 keeping in view the rising demand amongst the corporate players in the indian
retail industry.
Name of Sector FDI Inflows (Crores) FDI Inflows in (US $
million)
Percentage Share in
Total Investment
Food Processing
Industries
39453.72 6695.26 2.41
Source: Department of Industrial Policy & Promotion, Ministry of Commerce & Industry
(April 2000 - December 2015)
1720-Apr-17

18. FDI INFLOWS IN SECTORS AUXILIARY TO
AGRICULTURE
Name of Sector FDI Inflows
(Crores)
FDI Inflows in
(US $ million)
Percentage
Share in
Total Investment
Rubber Goods 11417.48 2031.52 0.73
Vegetable Oils
and Vanaspati
3154.77 587.48 0.21
Sugar 1110.62 188.51 0.07
Tea and Coffee
(Processing &
Warehousing
Coffee & Rubber)
505.49 109.62 0.04
Timber Products 789.11 140.19 0.05
Sources: Department of Industrial Policy & Promotion, Ministry of Commerce & Industry
(April 2000 - December 2015)
1820-Apr-17

19. TOP 10 COUNTRIES INVESTING IN INDIA
(FROM APRIL 2000 TO SEPTEMBER 2016 )
S.no Name of the Country Amount of Foreign Direct
Investment
(In Rs crore)
Amount of Foreign Direct
Investment
(In US$ million)
%age with Inflows
1. Mauritius 519,499.57 101,759.68 32.81
2. Singapore 287,948.94 50,559.91 16.30
3. United Kingdom 122,028.31 24,072.30 7.76
4. Japan 129,416.11 23,760.47 7.66
5. U.S.A 104,193.13 19,380.43 6.25
6. Netherlands 105,327.96 18,929.16 6.10
7. Germany 48,806.50 9,217.02 2.97
8. Cyprus 45,227.13 8,933.35 2.88
9. France 27,749.56 5,294.36 1.71
10. UAE 24,023.67 4,384.82 1.41
1920-Apr-17

20. TOP 9 FDI DESTINATION IN INDIA
(JANUARY 2016 TO NOVEMBER 2016)
S.No Regional Offices of RBI States Covered Amount of FDI Inflows
(Amount in US$
million)
%age with FDI Inflows
1 MUMBAI MAHARASHTRA, DADRA &
NAGAR HAVELI, DAMAN &
DIU
20,848.08 48.42
2 NEW DELHI DELHI, PART OF UP AND
HARYANA
6,324.69 14.69
3 AHMEDABAD GUJARAT 2,950.64 6.85
4 HYDERABAD ANDHRA PRADESH 2,353.48 5.47
5 BANGALORE KARNATAKA 2,308.85 5.36
6 CHENNAI TAMIL NADU, PONDICHERRY 1,093.35 2.54
7 KOCHI KERALA, LAKSHADWEEP 387.03 0.90
8 JAIPUR RAJASTHAN 141.42 0.33
9 KOLKATA WEST BENGAL, SIKKIM, 115.26 0.27
2020-Apr-17

21. EXISTING FOREIGN- INDIA PARTNERSHIP
S.No Foreign Retailer Indian Partner Type Investment
1. Mitsubishi Corp IFFCO Joint venture
2. Acumen Sahayog Dairy investment Rs 11 crore (US$
1.7 million
3. Rabo Equity Advisors India Agri Business
Fund II.
investment US$
100 million
4. Oman India Joint
Investment Fund
GSP Crop Science Joint venture Rs 95 crore (US$
14.62 million)
5. Belgium-based Univeg Mahindra &
Mahindra
Joint venture
(April 2000 to December 2015)
2120-Apr-17

22. OPPORTUNITIES
• Elimination of middlemen and long chain Supply: Due the FDI inventiveness, the
concept of the middleman, which has dominated farmers in India for decades, can be
eradicated and farmer can now get the full benefit of their produce.
• Increase in quality and productivity: New investment would result in other positive
externalities such as better seeds and stricter standards that would increase quality and
productivity while lowering costs.
• Infrastructure : Foreign companies are expected to take some constructive steps for
the creation of supply chain. Entry of foreign players, storage and refrigeration
infrastructure will improve significantly.
2220-Apr-17

23. CHALLENGES
• Monopolistic practices :Seed companies like Monsanto have been accused of
monopolistic practices. They first sell the seeds cheap, once they know farmers are
dependent on them, they raise prices.
• Dependency on Monsoon : In a monsoon dependent agriculture, FDI can move out if
there are two or three consecutive bad seasons and then the contract farmers could be
left stranded and have to depend on MSP offered by government.
• Fear of job loss: There might be job losses in the manufacturing segment. Though the
government has capped, the sourcing of commodities from the domestic market at 30 per
cent, the rest of the 70 percent can be bought from the foreign markets.
2320-Apr-17

24. FUTURE GROWTH
• 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. The 12th five-year plan estimates the food grains storage capacity to
expand to 35 MT. A 4 per cent growth would help restructure the agriculture sector in the
coming years.
2420-Apr-17

25. REFERENCE
 Yadav, K., Sharma. D (2013), "why foreign direct investment in agricultural retailing in India",iracst –
international journal of commerce, business and management (IJCBM), vol. 2, no. 6, pp. 453-456.
 Singh, k., Walia, R.K. (2015), “foreign direct investment (FDI) & agriculture sector in India”, Indian journal of
research, vol. 4, no.3, pp. 6-8.
 Quarterly fact sheet on foreign direct investment (fdi) by department of industrial policy & promotion (dipp),
government of India
 “Consolidated FDI policy of 2015” by department of industrial policy & promotion, Ministry of commerce &
industry, government of India
 “Agriculture policy: vision 2020” by Indian agricultural research institute, New Delhi
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