1. ―The government o India has responded swiftly to the
initiative of the Indian business community by identifying
south Africa as a thrust market for realizing larger
exports from the country‖
The bilateral relations between the Republic of India and the Republic of South
Africa have grown strong since the end of apartheid in South Africa in 1994. Both
nations have since developed close strategic, cultural and economic ties.
India and South Africa also share an extensive energy partnership. In 2010, India
imported 1.4 million tonnes of South African coal in February, making it the largest
purchaser of coal from the country. Ties with further solidified with South Africa's
2011 acceptance into the BRICS group.
Economic ties
Bilateral trade grew exponentially from USD 3 million in 1992-93 to USD 4 billion in
2005-06, and the two governments have targeted increasing bilateral trade to USD
12 billion by 2010. Gold bullion constitute one-third of India's imports from South
Africa, while India polishes and processes diamonds from South African mines.
South Africa has promoted signing a free trade agreement with India and
the Southern Africa Customs Union (SACU), which
includes Botswana, Lesotho, Namibia and Swaziland along with South Africa.
Bharti Airtel was scheduled to acquire MTN to make one of the world's largest
telecommunications companies, and also touted as step in South-South cooperation.
The deal was, however, rejected by the South African government of Jacob Zuma on
the grounds that MTN would not be as South African anymore amid concerns of
dual-listing on the Indian and South African stock exchanges.
Military ties
India and South Africa have also developed military cooperation, trading arms and
joint exercises and programs to train forces.
IBSA
On June 6, 2003 India and South Africa signed an agreement with Brazil, known as
the Brasília Declaration, establishing "South-South" cooperation, based on the
premise of the three nations being regional powers of South Asia, Southern
Africa and South America. The declaration called for extensive tripartite cooperation
on strategic, commercial and cultural affairs, development of a tripartite free trade
agreement and a united front in negotiating with Western nations in the World Trade
Organization (WTO), calling for reform of the U.N. Security Council and supporting
each other's bid for permanent membership with veto rights. The IBSA Dialogue
Forum was created to promote cooperation and consensus on issues of trade,
poverty alleviation, intellectual property rights, social development, agriculture,
climate change, culture, defence, education, energy, health-care, information

2. society, science and technology, peaceful nuclear energy, tourism and
transport. The fourth summit was held in Brasília. The three nations pledged to boost
trilateral trade to USD 15 billion by 2010. The three nations have also expanded
military cooperation and conducted joint naval exercises in 2008.
President Pratibha Patil said she is confident that trade between India and South
Africa will reach USD 15 billion by 2015 as the two have become important trading
partners.
Patil and South African President Jacob Zuma appreciated businesses in both the
countries for having reached the earlier target of USD 10 billion by 2012, a year
ahead of the schedule.
Meanwhile, the two sides also called for various steps to facilitate business including
easier visa regime for Indian ICT companies and greater transparency for South
African businesses in the Indian market.
Minister of State for Communications and IT Sachin Pilot, called for a change in the
South African visa regime to allow easier entry. He said Indian ICT companies
consider Africa as an important market.
On the other hand, Business Unity South Africa President Futhi Mtoba said that
among the challenges, amid increasing investment in India, was a need for greater
transparency in India's tariff schedules, especially in the agricultural sector.
"We want India to be an open market for South African foreign direct investment,"
Mtoba said.
Addressing business forum from both countries as part of her week-long state visit to
South Africa, Patil said South Africa had become one of India's most important
trading partner.
"The economic and commercial exchange between our two countries is at the core
of our bilateral ties," she said.
"I am happy that Indian companies work closely with the priorities of the South
African government and they are also seeking to add value to raw materials through
beneficiation locally," Patil added.
Indian companies have not only entered into partnerships with their South African
counterparts, but also view it as a gateway to the Southern African region.
Patil said, "Our confidence in the South African economy is reflected in the fact that
several major Indian banks are present in South Africa. We are also happy that
many companies form South Africa have established their presence in India."
She said that on average at least one South African business delegation visited India
every month.
Calling on business to find complementarities in various fields such as energy and
gasification of coal for partnerships, the president also highlighted the co-operation
between the two countries in space exploration so that they were not left out in this
area.
Zuma in turn called on Indian business to take advantage of the huge opportunities
on the Africa continent with its priorities that infrastructure and communication.

3. Apart from oil and natural resources, India engages with Africa in agriculture, health,
information and communication technology (ICT), education and skills transfer, to
name a few. Going forward, the sectors to focus on would be Agriculture, Small and
Medium Enterprises, Finance and Tourism. Cooperation in Social Development and
capacity building would be another area of cooperation given that both the countries
are young societies keen to translate the demographic dividend into effective growth.
To further increase the engagement, the Minister spoke of negotiations with South
Africa Customs Union (SACU) for a PTA, and the setting up of the India Africa
Business Council to develop a road map for business partnership. He concluded his
address by saying that engaging with the LAC and African regions will give further
impetus to the growth and synergetic opportunity for all.
Challenges such as a widening current accounts deficit made it move away from the
earlier-held view of exports as a phenomenon of surplus. It recognized that exports
were an essential economic activity with a wider and greater impact on the country’s
economy. This, coupled with the recognition that the conventional approach and
traditional markets would not work anymore, the Department of Commerce
formulated a strategy keeping in mind issues such as market diversification and
product diversification.
Giving the industry’s perspective, stressed on the need to move beyond conventional
markets. He said that today, South-South Trade has become a beacon of hope in
these trying times. There is tremendous potential as can be seen in the way India-
Africa trade has grown over the years: from US$ 967 million in 1991 to US$ 50 billion
in the first quarter of 2011. India’s economic engagement has been growing beyond
gold and oil, which India imports, and a host of manufactured goods that it exports to
Africa. Several Indian companies such as the Godrej Group, Bharti Airtel, Vedanta
have acquired companies or have other business interests in Africa and several
other companies such as L&T, NIIT are looking to follow in their footsteps.

4. ―The strategy for export of Marine products from India
pre – supposes strengthening of the production base on
the one hand & adopting an effective marketing
arrangement on other‖.
Asia Economy Watch June 2008
 India’s seafood exports, which stagnated few years back, are likely to touch
over $3.5 billion from current level of $2.2 billion by 2009, provided a key
thrust area include value-addition, expansion of aquaculture, technological
upgradation and tapping unexplored resources.
 In a paper brought out by Associated chambers of commerce & industry of
India (ASSOCHAM) on ―Market of Seafoods in India‖, it has been projected
that India’s Seafood exports, which remained at $1.6 billion in 2005-06 and is
anticipated to reach around $2.2 billion in 2007-08, have potential to
accelerate faster in view of their growing demand in trading blocks like the
EU, Middle East, China, Canada, Russia.
The Marine Industry – Some Facts
 Exported to more than 90 countries.
 India has one of longest Coastline of 8118 Km.
 Global Share of India is 4.2% at second Position, while China has 69%
share.
 Has one of largest area under Estuaries, backwaters and Lagoons, which are
highly conductive for developing capture as well as culture fishes.
 Employees 30 Lac people, contributes 1% to Indian GDP and 4.5 % to
Agriculture and Allied products.
 Indian Fishing Industry got a major boost after the declaration of EEZ
(Exclusive Economic Zone) in 1977.
 Major Exporting States are AP, Kerala, Tamil Nadu, West Bengal.
 Potentially Unexplored states are Gujarat, Orissa, Maharashtra.
 Major products are Shrimps, frozen fish, cuttlefish, squid and dried items.
Trends in Exports
Marine product exports has steadily grown over the years; from a mere Rs.3.92
crore in 1961-62 to Rs.8363.53 crore in 2006-07 , 1.4% of the total exports from
India.
 Until 1960
 Products were Dried Shrimps and Dried Fish
 Market was neighboring countries.
 From 1960 – 1977
 Products were Frozen Shrimps

5.  Major market beside neighboring countries were USA, Japan. USA
emerged as single largest buyer.
 1977 – 2001
 Japan Emerged as single largest buyer followed by Western European
Countries.
 2001 – 2004
 USA again topped the charts as Single largest importer of Indian
Marine Products.
 2005 – till date
 European union became largest importer importing 33% of Products
 Japan 16.18%
 USA 16.12 %
 China 13.83%
 South East Asia 7%
 Middle East Asia is New emerging Market.
 The product preference is shifting from Frozen Shrimps to Processed
Products and other marine products.
 Meager utilization of natural gift.
 Total production
 Potential – 15 Million Tonnes
 Production – 2.5 Million Tonnes
 Fresh waters and Ponds
 Total Available – 2.4 Million Hectares.
 Utilized – 1.5 Million Hectares.
 Production Per Hectare (Pond Culture)
 Potential – 5 Tonnes per Hec.
 Production – 2 Tonnes per Hec.
 Production Per Hectare (Reservoirs and Tanks)
 Potential – 600 Kg per Hec.
 Production – 100 Kg per Hec.
Marine Export Items
 Traditional Items:
 Shrimps - Oyster - Tuna Fish
 Squids - Lobster - Frozen Fish
 Cuttlefish - Shark - Squids
Value Added Items.
 Cultured Shrimp
 Battered Shrimp
 Cook Shrimp
 Fish Fillet.

6. Year Export V
2002-03 Q 467297 4
V 6881.3 9
$ 1424.9 1
2003-04 Q 412017 -5
V 6092 -7
$ 1330.8 -9
2004-05 Q 461329 4
V 6646.7 5
$ 1478.5 1
2005-06 Q 512164 5
V 7245.3 5
$ 1644.2 1
2006-07 Q 612641 1
V 8363.5 1
$ 1852.9 2
ITEMS % APR- AP
Share MAR MA
to 2006- 200
Total 07 06
Frozen 22 Q 137397 145
Shrimp 53.88 V 4506.08 427
53.84 $ 997.64 970
UV$ 7.26 6.6
Frozen 44 Q 270751 182
Fin 17.37 V 1452.88 998
Fish 17.38 $ 321.95 225
UV$ 1.19 1.2
Frozen 9 Q 55701 496
Cuttle 9.53 V 797.37 549
Fish 9.49 $ 175.75 124

7. UV$ 3.16 2.5
Frozen 8 Q 47252 523
Squid 6.8 V 568.32 575
6.81 $ 126.25 130
UV$ 2.67 2.4
Dried 4 Q 24293 141
items 2.19 V 183.16 132
2.2 $ 40.75 30.
UV$ 1.68 2.1
Live 0 Q 2478 256
items 0.77 V 64.06 61.
0.77 $ 14.22 13.
UV$ 5.74 5.4
Chilled 1 Q 7200 506
items 1.4 V 117.3 81.
1.44 $ 26.63 18.
UV$ 3.7 3.6
Others 11 Q 67571 608
8.06 V 674.35 574
8.08 $ 149.72 130
UV$ 2.22 2.1
TOTAL 100 Q 612641 512
100 V 8363.53 724
100 $ 1852.93 164
UV$ 3.02 3.2
What to Export - Tradition so far
 Shrimp –
 20% of world’s imports.
 Mainstay in India’s Exports 65.88% (2004), 53% (2008)
 200 world class Seafood processing factories.
 Kerala has 40 percent of the total processing Industries, followed by AP,
Tamil Nadu and Gujarat.
Changing Trend
 The India’s exports of Shrimps and frozen Squid are declining year on year.
 One major reason of decline is Export of Cheaper Vannamei Shrimps from
neighboring countries.
 The trend is shifting towards Value Added Products and Processed Shrimps.
 New Potential Species are
 Mud Crabs,
 Tuna Fish,

8.  Sea brass,
 Mullets, and Pearl Spot fishes.
India - A Seafood Processing Hub
 The government has allowed import of raw materials required for processing
plants.
 More Thrust is given on ―Ready to Eat‖ and ―Ready to Cook‖ kind of
processed items.
 First seafood processing zone was developed in Kolkata, with investment of
Rs 480 million.
 The processing zone started with 10 large scale private sector processing
units.
New Products - Tuna Fish
New Fish to Fry
 Tuna fish is third most traded Fish internationally.
 Tuna fish exports are targeted to reach 400 million dollar by 2010.
 Andaman and Nicobar Island holds 25-30 per cent of tuna potential.
New products – Mud Crabs
 Technology for hatchery seed production of Mud Crabs and Sea Bass fish
has recently been developed by CIBA (Central Institute of Brackish Water
Aquaculture) and MPEDA .
 Potential sites spotted for this are Tamil Nadu and Andhra Pradesh.
 Mud Crab is identified as best substitute of Shrimps.
 By using the technology 1 lakh tonnes of Mud Crabs can be produced giving
revenue of Rs. 2000 Crores.
New products – Sea Bass Fish
 High valued Sea Bass Fishes can tolerate wide variation in environmental
conditions.
 It can be produced in vast coastal region example Andhra Pradesh, Tamil
Nadu, Kerala, Maharashtra.
 The technology has been perfected in Southeast Asia, and is in nascent stage
in India.
 One kilogram of Sea Bass fish can give a revenue of Rs 100.
Ornamental Fish – New Fish in Town
 Most popular among Hobbyist.
 Used in Aquariums around the World.
 Major Exporters Singapore, Hong Kong, Malaysia, Thailand, Philippines, Sri
Lanka, Taiwan, Indonesia and India.

9.  Major Importers USA, Japan and Europe. China and South Africa are
Emerging Markets.
 Global Trade of $5 Billion annually, growing by 6%.
 India Exports worth Rs 1.58 Crores, growing at 20% annually.
 The tropical ornamental fishes from North eastern and Southern provinces of
India are in great demand in the hobbyists market .
 Loaches, Eels, Barbs, Catfish, Goby
How to Export?
 Chennai Port handles 24% in terms of Value, but the carriage is declining
over the years, the emerging high capacity ports are
 Haldia
 Tuticorin
 Kochi
MPEDA – Marine Products Exports Development Authority
 Head Quatered – Kochi (Kerela)
 6 Regional/ 4 Sub- Regional Offices
 2 International Offices – New York and Tokyo.
 Our vision is to achieve the export of 5 Billion US $ worth marine products by
2014-15 that too with the 75% contribution of value added items.
Schemes
 Logo Scheme – to gain wide market acceptance.
 Active participation in 15 International Trade Fairs.
 A delegation consisting of Indian Exporters were send to Japan to address the
quality issue. The exporters made series of presentations in major cities of
Japan.
Challenges
 Impose of Anti-dumping duty by US in 2004.
 Japan and EU imposed strict quality control standards on Indian Marine
Products.
 Indian Exports are Single Product (Shrimp) and Single Market (USA and
Japan) oriented Industry.
 Diesel accounts for 75% of Input cost, escalating diesel prices i.e. from Rs 5
in 1991 to Rs. 40 present is major challenge to overcome.
 The Global imports of Shrimp are declining and demand towards processed
food is increasing. Low scale Indian Exporters lack Risk Taking capacity to
jump into technology Sophisticated Processed food Industry.
 As a result of Above, the financial institutions have lost confidence in Small
and Medium Players dominated Indian Fisheries Industry.

10. Export Strategy
 It is necessary to treat marine products as technology Intensive sector.
 “Value addition has been considered as the thrust area. Indian seafood
processing units will be encouraged to go in for value addition and export
through setting up new units, expanding their capacity and diversifying their
current activities. Foreign collaboration, investments, tie ups in marketing of
value added products and fish import for further processing and export in
value added forms will be encouraged.”
- G.
Mohan Kumar Chairman, MPEDA
Indian Logo – MPEDA logo scheme
 Products
 Mud Crabs
 Tuna Fish
 Sea Brass
 Ornamental Fish
 Markets
 Vietnam
 Belgium
 Canada
 Germany
 Hong Kong
 China

11. ―The services sector is critical to the future growth of
our country‖
India stands out for the size and dynamism of its services sector. The contribution
of the services sector to the Indian economy has been manifold: a 55.2 per cent
share in gross domestic product (GDP), growing by 10 per cent annually,
contributing to about a quarter of total employment, accounting for a high share in
foreign direct investment (FDI) inflows and over one-third of total exports, and
recording very fast (27.4 per cent) export growth through the first half of 2010-11.
i) The importance of the services sector can be gauged by looking at its
contributions to different aspects of the economy.
Services GDP
The share of services in India’s GDP at factor cost (at current prices)
increased rapidly: from 30.5 per cent in 1950-51 to 55.2 per cent in 2009-10. If
construction is also included, then the share increases to 63.4 per cent in
2009-10.
The ratcheting up of the overall growth rate (compound annual growth rate
[CAGR]) of the Indian economy from 5.7 per cent in the 1990s to 8.6 per cent
during the period 2004-05 to 2009-10 was to a large measure due to the
acceleration of the growth rate (CAGR) in the services sector from 7.5 per
cent in the 1990s to 10.3 per cent in 2004-05 to 2009-10. The services sector
growth was significantly faster than the 6.6 per cent for the combined
agriculture and industry sectors annualoutput growth during the same period.
In 2009-10, services growth was 10.1 per cent and in 2010-11 advance
estimates—AE) it was 9.6 per cent. India’s services GDP growth has been
continuously above overall GDP growth, pulling up the latter since 1997-98. It
has also been more stable.
II) Ministry of Commerce and Industry, Government of India, with a view to
give proper direction, guidance and encouragement to the Services Sector,
has set up an exclusive Export Promotion Council for Services in the name of
Services Export Promotion Council (SEPC). SEPC was registered under the
Societies Registration Act in November, 2006. DGFT, vide Gazette
Notification dated 5/3/2007, included SEPC in the list of the recognised
Export Promotion Councils. SEPC has been mandated to promote export of
services in the following sectors:-

12. Healthcare services including
1 services by nurses, physiotherapist 8 Environmental Services
and paramedical personnel
2 Educational Services 9 Maritime Transport Services
Entertainment services including
3 10 Advertising Services
Audio-visual services
Marketing Research and Public
4 Consultancy Services 11 Opinion Polling Services/Management
Services
Architectural Services and related
5 12 Printing & Publishing Services
services
6 Distribution Services 13 Legal Services
Accounting/Auditing and Book
7 14 Hotel and Tourism related services
Keeping Services
Ministry of Commerce & Industry administers a scheme known as Market
Development Assistance (MDA) Scheme for the promotion of exports
including services exports. Service Exporters, who are members of SEPC, are
eligible for financial assistance under MDA scheme for participating overseas
“Buyer Seller Meet” or in any international conference to showcase their
service capability.
With the new Foreign Trade Policy (2009-14), the Government of India has
aimed to accelerate growth in export of services so as to create a powerful
and unique „Served from India‟ brand. Services providers who have a total
foreign exchange earnings or earning in Indian rupees which are otherwise
considered as having been paid for in free foreign exchange by RBI, of at
least Indian rupee 10 lakhs in the current financial year shall be eligible to
qualify for duty credit scrip. They shall be entitled to duty credit equivalent
to 10 percent of the foreign exchange earned by them in the current

13. financial year. Duty credit entitlement may be used for import of any capital
goods including spares, office equipment and professional equipment, office
furniture and consumables, provided it is part of their main line of business.
III) FDI in Services in India
The measurement of the share of services in FDI inflows encounters problems as it
is difficult to clearly differentiate activities between services and goods in sectors
such as computer hardware and software, telecommunications, and construction.
Nevertheless, the share of the four sectors combined (services [financial and
nonfinancial], computer hardware and software, telecommunications, and housing
and real estate), predominantly consisting of services, in FDI equityinflows in April
2000–December 2010 is around 44 per cent. If construction is included then the
share rises to 51 per cent. The financial and non-financial services sector which falls
purely in the services category is the largest recipient of FDI equity inflows with a 21
per cent share. This is followed by the other two sectors, namely computer software
and hardware, and telecommunications each with 8 percent share. Housing and real
estate, and construction with 7 per cent share each were next in importance.
The year 2009-10 has seen a drying up of FDI inflows to India due to the global crisis
with a fall of 5.5 per cent. Mirroring this trend, FDI inflowsin the services sector also
fell by 29.1 per cent (in US dollar terms). The first nine months of 2010-11 have also
not shown any improvement on the FDI front, overall and in services sectors. in the
services sector also fell by 29.1 per cent (in US dollar terms). The first nine months
of 2010-11 have also not shown any improvement on the FDI front, overall and in
services sectors.

14. Agriculture sector in INDIA.
Agriculture
Overview:
Agriculture is the backbone of Indian Economy. About 65% of Indian population
depends directly on agriculture and it accounts for around 22% of GDP. Agriculture
derives its importance from the fact that it has vital supply and demand links with the
manufacturing sector. During the past five years agriculture sector has witnessed
spectacular advances in the production and productivity of food grains, oilseeds,
commercial crops, fruits, vegetables, food grains, poultry and dairy. India has
emerged as the second largest producer of fruits and vegetables in the world in
addition to being the largest overseas exporter of cashews and spices. Further, India
is the highest producer of milk in the world.
Climate:
India has Monsoon climate in which a year has been divided into two distinct
seasons of summer and winter. Rainfall occurs mainly in summer.
Weather Forecasting System:
India has a strong weather forecasting system developed and maintained by Indian
Meteorological Department (IMD). Apart from weather forecasting and severe
weather warning, it also gives agro meteorological services to farmers in India.
Agro Climatic Zones:
India has diverse agro-climatic zones from north to south and from east to west. It
has been divided into fifteen different agro-climatic zones, which signifies its
diversified agricultural production from tropical to temperate crops.
Major Crops:
Rice, Wheat, Sugarcane, Oilseeds, Pulses, Cotton, Jowar, Bajra, Ragi, Tea, Coffee,
Coconut, Cashew, Rubber, Spices, Cauliflower, Onion, Cabbage, Mango, Banana,
Sapota, Acid lime.
Farm Size:
Indian Agriculture is characterized by small and marginal operational holdings. About
85% of total cultivated land has been fragmented into less than 10-hectare land.
About 60% of farmland is less than 4 hectare in size.
Production Trend:

15. All the production figures are in million tones. Mechanization in Indian agriculture is
still at rudimentary stage showing regional variation. But it is increasing over the
years. Power availability for carrying out various agricultural operations, which is one
of the indicators of mechanization, has been increased from 0.3 kilowatt per hectare
in 1971-72 to 1.4 kilowatt per hectare in 2003-04.
Plantation:
Tea, Coffee, and Natural rubber are the main plantation crops in India that contribute
in Indian export to a considerable extent. India is the largest producer and consumer
of tea in the world. It contributes 4% to global coffee production and enjoys a niche
market byproducing both arabica and robusta coffee. In rubber also, it ranks third in
production and fourth in consumption of natural rubber in the world.
Horticulture:
India has a great potential in the production of horticultural crops, which includes
fruits, vegetables, spices, floriculture, and plantations. Acreage under horticulture is
around 20 million hectares. India is the second largest producer of both fruits and
vegetables in the world. It occupies first position in the production of cauliflower,
second in onion, and third in cabbage.
Dairy:
India ranks first in the world in milk production, which was around 100 million tones
in 2006-07.Strong networks of Milk Cooperatives, have been instrumental in this
phenomenal performance of dairy sector in India. Presently, 1.13 lakh village level
cooperative societies spread over 265 districts in the country form part of the
national Milk Grid. This Grid links milk producers throughout India and consumers in
700 towns and cities. De-licensing of dairy sector in 1991 has directed considerable
amount of private funds both from inside and outside country in this sector especially
in manufacturing facilities while investment in cooperative sector are concentrated
largely in procurement and processing of milk.
Livestock:
Livestock sector contributes about 27% of the G.D.P. from agriculture and allied
activities. This sector has excellent forward and backward linkages, which p-promote
many industries and increase the incomes of vulnerable groups of the society such
as agricultural labourers and small and marginal farmers. India possesses the
second largest livestock population in the world. Production and export of poultry
products have shown considerable growth in the recent decades. Export of such
products to countries including Bangladesh, Srilanka, Middle East, Japan, Denmark,
USA, and Angola augers well for this industry.
Fishery:
Fishing, aquaculture and a host of allied activities are a source of livelihood to over
14 million people and a major source of foreign exchange earner. In 2005-06, this
sector contributed about 1% of G.D.P. and 5.3% of G.D.P from agricultural

16. sector.8,118 k.m. of coastline gives geographical basis for the development of
marine fishery sector and cultural factor boosts the inland fishery sector in India.
Agricultural Finance
Credit: Availability of adequate credit is vital for every sector and agriculture is not an
exception. In India, Commercial Banks, Cooperative Banks, and Regional Rural
Banks ( RRBs) are responsible for smooth flow of credit to agricultural sector. But a
huge unorganized market exists for credit to agricultural sector in India, which
provide timely fund to this sector but at the exorbitant rate of interest. Among
organized credit disbursement to agriculture commercial banks play a vital role with
a share of about 70% where as cooperative sector and RRBs contribute 20% and 10
% respectively.Kisan Credit Card (KCC) scheme was introduced to provide adequate
and timely support from the banking system to the farmers for their cultivation needs.
This scheme has made rapid progress and more than645 lakh cards issued up to
October 2006.
The 'Farm Credit Package' announced by the Government of India in June 2004
stipulated doubling the flow of institutional credit for agriculture in ensuing three
years. Annual targets for this package are being surpassed in the two consecutive
years from its introduction and it is likely to surpass in the third year also.
Insurance: Insurance is a prime necessity to mitigate uncertainty that persists in
agriculture. In India, agriculture is still affected by such factors, which are beyond
control of human being. So, there is a great need for agricultural insurance in India.
Keeping this in mind, Government of India in coordination with the General
Insurance Corporation of India (GIC), had introduced National Agricultural Insurance
Scheme (NAIS) from rabi 1999-2000 season. The main objective of this scheme is to
protect the farmers against losses suffered by them due to crop failure on account of
natural calamities. Agricultural Insurance Company of India (AICIL) which was
incorporated in December 2002 took over the implementation of NAIS.
AICIL introduced Rainfall Insurance Scheme called 'Varsha Bima' during 2004
southwest monsoon period. Varsha Bima provided for five different options suiting
varied requirements of farming community:
1. Seasonal rainfall insurance based on aggregate rainfall from June to September.
2. Sowing failure insurance based on rainfall between June 15 and August 15.
3. Rainfall distribution insurance with the weight assigned to different weeks June
and September.
4. Agronomic index constructed on the basis of water requirements of crops.
5. A catastrophe option covering extremely adverse deviation of 50% and above in
rainfall during the season.

17. During kharif 2006, this Varsha Bima scheme is being implemented in around 150
districts covering 16 states across the country. AICIL is also piloting another weather
related insurance product for mango and coffee.
Rural Infrastructure Development Fund (RIDF): RIDF was announced by the
Government of India in 1995-96 to boost public sector investment in agriculture and
rural infrastructure. The Fund is raised from the commercial banks to the extent of
their short fall in agricultural lending as priority sector. The activities, which have
been made eligible for loans from RIDF, include rural roads and bridges, irrigation,
mini and small hydel projects, community irrigation wells, soil conservation,
watershed development and reclamation of waterlogged areas, flood protection,
drainage, forest development, market yard, godowns, apna mandi, rural haats and
other marketing infrastructure, cold storages, seed/agriculture/horticulture farms,
plantation and horticulture, grading and certifying mechanisms such as testing and
certifying laboratories, fishing harbors/jetties, reverine fisheries, animal husbandry,
modern abattoir, drinking water supply, infrastructure for rural educational
institutions, public health institutions, construction of toilet blocks in existing schools
and 'pay and use' toilets in rural areas, village knowledge centers, desalination
plants in coastal areas, infrastructure for information technology in rural areas, and
construction of anganwari centers.
Micro Finance: Micro finance scheme has been introduced by National Bank for
Agriculture and Rural Development (NABARD), the apex bank for agriculture and
rural development in India, to improve the access of the rural poor to formal
institutional credit and other financial products. In all 547 banks, which include 47
commercial banks, 158 RRBs, 342 cooperative banks are now actively involved in
the operation of Self Help Group (SHG)- Bank Linkage Programme to spread the
facility of micro finance to the needy small and marginal farmers and tiny
entrepreneurs. The programme has enabled nearly 329 lakh poor families in the
country to gain access to micro finance facilities from the formal banking system.
Capital Formation in Agriculture: The share of the agriculture sector's capital
formation in G.D.P. declined from 2.2% in the late 1990s to 1.9% in 2005-06.
Stagnation or fall in the public investment in irrigation is partly responsible for this
fall. However there is indication of a reversal of this trend with public sector
investment in agriculture accelerating since 2002-03.The share of public investment
in gross investment in agriculture increased by 6.5 percentage points from 1999-
2000 to reach 24.2% in 2005-06.
Marketing of Agricultural Products
Form of Markets exists in India: Agricultural markets in India are dominated by the
existence of unorganized and unregulated agricultural mandies with the presence of
a large number of middlemen and widespread prevalence of malpractices. Absence
of proper warehousing facilities in the villages, lack of proper transportation facilities
and infrastructure such as rails and good quality all weather roads and ignorance
about the market prices of their products are some of the important factors for
exploitation of farmers from middle men. They are forced to sell their products to
these middlemen at the farm gate at throwaway prices.

18. Agricultural Market Reforms in India: Ministry of Agriculture had formulated a model
law on agricultural marketing in consultation with State/Union territory Governments
to bring about marketing reforms in line with emerging trends. This model act
enables establishment of private markets/yards, direct purchase centers,
consumers/farmers markets for direct sale, and promotion of public-private
partnership (PPP) in the management and development of agricultural markets in the
country. It also provides for exclusive markets for onion, fruits, vegetables, and
flowers. Regulation and promotion of contract farming arrangement has also been
made a part of this legislation. A provision has also been made for constitution of
State Agricultural Produce Standard Bureau for promotion of grading,
standardization, and quality certification of agricultural produce.