Special Feature On Agriculture Sector

Led by well-planned government initiatives and the beefing up of infrastructure, Bhavya Rathod explains how India’s agriculture sector is bounding ahead at a rapid pace, primarily on account of exports. In the coming years, the country is all set to create a strong global footprint with leads in sugar, Basmati rice, fisheries and food processing 

About 58 per cent of India’s population relies primarily on agriculture as a source of income, making India one of the key players in the global agricultural industry. India is the world’s largest producer of milk, pulses and spices. It also has the largest herd of cattle, and the largest area planted with wheat, rice and cotton. It is the second-largest producer of wheat, rice, cotton, sugar, farmed fish, fruit, vegetables, tea and farmed vegetables. About half of the population of India is employed in the agricultural industry, which in the world has the second-largest amount of agricultural land. The pandemic and the ensuing lockdowns caused some unrest and fear around the world. [EasyDNNnews:PaidContentStart]

Due to the resulting significant supply and demand side interruptions, firms dealt with a variety of problems throughout the year. While the output of significant industries decreased, the agriculture sector held up well and increased by 3.6 per cent over the course of the year. Agriculture, a crucial sector of the Indian economy that accounts for 25 per cent of the nation’s GDP, offers rural populations a wide range of employment options, food security and therefore a sizeable domestic market for manufactured goods. Between April 2000 and June 2022, FDI inflow into the sector totalled USD 2,600.70 million, showcasing a significant rise in investments. 

Government Initiatives 

The government has taken several measures in order to access the agricultural market by making aggressive investments in infrastructure development including irrigation projects and rural highways. In order to support the industry, the government has also implemented a number of subsidies and tax breaks. In general, the Indian agricultural industry has the ability to significantly contribute to the nation’s economic development. In the Union Budget 2022-23: 

◼ ₹ 1.24 lakh crore has been allocated to the Department of Agriculture, Cooperation and Farmers’ Welfare.

◼ ₹ 8,514 crore has been allocated to the Department of Agricultural Research and Education. 

The other initiatives are:

◼ The Government of India has allowed 100 per cent FDI in the marketing of food products and in food product e-commerce under the automatic route.
 
◼ In April 2021, the Government of India approved a PLI scheme for the food processing sector with an incentive outlay of ₹ 10,900 crore (USD 1,484 million) over a period of six years starting from FY22.

◼ In July 2022, PM Formalisation of Micro Food Processing Enterprises (PMFME) scheme was launched for providing financial, technical and business support for setting up or upgradation of micro food processing enterprises in the country with an outlay of ₹ 10,000 crore.

◼ The Indian government is planning to launch drones for crop assessment, digitisation of land records and spraying of insecticides and nutrients.

◼ In September 2021, Prime Minister Narendra Modi launched 35 crop varieties with special traits such as climate resilience and higher nutrient content.

◼ With a budget of USD 1.46 billion, the Production- Linked Incentive Scheme for Food Processing Industry (PLISFPI) has been approved to develop global food manufacturing champions commensurate with India’s natural resource endowment and to support Indian food brands in international markets. 

Exports 

Agriculture exports in India increased by 19.92 per cent in FY 22 to reach USD 50.21 billion, following a strong growth rate of 17.66 per cent at USD 41.87 billion in 2020–21. By 2025, it is expected that the Indian agriculture sector will grow to a value of USD 24 billion. The sixth-largest food and grocery market in the world is in India, with 70 per cent of sales coming through retail. According to the first advance estimates for FY 2022–23 (kharif alone), the nation’s total production of food grains is predicted to be 149.92 million tonnes. India’s rapid population growth is the primary force behind the industry’s growth. 

Additional assistance is provided by the expanding income levels in rural and urban areas, which have increased demand for agricultural products across the country. Accordingly, the market is being encouraged by the increasing use of innovative technologies such as blockchain, artificial intelligence (AI), geographic information systems (GIS), drones and remote sensing technologies as well as the introduction of numerous e-farming applications. By 2022, India’s agriculture exports are probably going to accomplish their goal of USD 60 billion. In the first eight months of the 2022 calendar year, India’s tea exports increased 14.8 per cent to 140.28 million kg. 

From January to August 2021, tea shipments totalled 122.18 million kg. According to available data, the CIS countries, which include Russia, Ukraine and Kazakhstan, continued to be the largest consumers of Indian tea. They imported 30.56 million kg during the first eight months of 2022, up from 29.13 million kg exported to these countries during the same period in 2021. According to industry experts, the UAE has the potential to import a significant amount of Indian tea because it prefers conventional tea over CTC. In the first eight months of 2022, India exported tea worth ₹ 3,837.28 crore compared to ₹ 3,353.35 crore in the same period in 2021. 

Sugar 

Sugar stock investors have been favoured with a rewarding experience through sweet returns on their investments in this segment. India is the world’s second-largest producer and exporter of sugar, trailing only behind Brazil. Since 2010-11, India has consistently produced more than enough to meet the domestic demand. Sugar exports in India increased by 65 per cent in 2021-22 with Uttar Pradesh, Maharashtra and Karnataka accounting for nearly 80 per cent of the total production. Sugar stocks such as Triveni Engineering, Bannari Amman Sugars, E.I.D Parry (India) and Shree Renuka Sugar have led the pack in terms of healthy positive growth in profit after tax (PAT). 

The Indian sugar industry is undergoing a transformation that will not only protect sugar producers’ operations from cyclicality but will also significantly improve them. India’s sugar production increased 5.1 per cent year on year until December 15, according to data from the Ministry of Agriculture. Sugar production in FY 2022-23 (until December 15) was 82.1 lakh tonnes, up from 77.9 lakh tonnes in the same period the previous year. Maharashtra leads the way with production of 33 lakh tonnes of sugar followed by Uttar Pradesh with 20.3 lakh tonnes. According to International Securities Market Association (ISMA), the number of active factories is now 497, up from 479 the previous year. 

Furthermore, total sugar exports are expected to reach around 15 lakh tonnes by the end of December. So far in the current 2022-2023 season, India has contracts for the export of approximately 35 lakh tonnes of sugar, of which 2,000,000 tonnes were sent last month. The 2022-23 sugar export policy, announced on November 5, allows for quota-based exports of 60 lakh tonnes of the sweetener. More export quantities will be permitted once the domestic output has been evaluated. The crushing operation began during the current 2022-2023 season. Mills had produced 19.9 lakh tonnes of sugar as of November 15 in this season. During the season of 2021-22 the country exported 11 million tonnes of sugar.
 

Basmati Rice

Among the several varieties of rice, Basmati is considered the most superior in terms of product characteristics and therefore the most premium. India accounts for nearly 85 per cent of the global Basmati exports. In India, Basmati exports are about 37 per cent of the total rice exports by quantity and 60 per cent by value. With exports to nearly 90 countries, nearly 60 per cent of India’s Basmati rice production is targeted for international consumption. The country exported 3,948,161.03 MT of Basmati rice worth ₹ 26,416.49 crore during the year 2021-22. Basmati rice exports increased 25.54 per cent to USD 1.15 billion in April-June 2022-23. In the previous year, exports totalled USD 922 million. 

Non-Basmati rice exports increased 5 per cent to USD 1.56 billion in the June quarter, according to the report. In the third quarter, agricultural and processed food exports increased 31 per cent to USD 7.4 billion. Despite pandemic-triggered challenges in the short term, the outlook for the Indian Basmati rice industry remains stable. In the medium term, demand prospects from key destinations such as Iran and Saudi Arabia will play a significant role and determine trade prospects. Availability of a secure payment mechanism for exports to Iran, easing and removal of sanctions by the US and response to the pandemic in the destination country would be the factors underscoring the Basmati rice trade. 

Outlook 

The agricultural sector in India is expected to grow to USD 24 billion by 2025. The ambitious goal of doubling farm income by 2022 is expected to be met by India. The agriculture sector in India is expected to gain traction in the coming years as a result of increased investment in agricultural infrastructure such as irrigation, warehousing and cold storage. Furthermore, the increasing use of genetically modified crops will almost certainly increase yield for Indian farmers. Due to a concerted effort by scientists to obtain early maturing varieties of pulses and an increase in the minimum support price, India is expected to be self-sufficient in pulses in the coming years. 

Under the PM Matsya Sampada Yojana, the central government plans to invest USD 9 billion in the fisheries sector over the next five years. By 2024-25, the government hopes to increase fish production to 220 lakh tonnes. The food processing industry will benefit from the adoption of food safety and quality assurance mechanisms such as Total Quality Management (TQM) including ISO 9000, ISO 22000, Hazard Analysis and Critical Control Points (HACCP), Good Manufacturing Practices (GMP) and Good Hygienic Practices (GHP) in the future. Despite macroeconomic headwinds such as the pandemic, India’s agriculture sector has shown resilience in recent years. The world is fully immersed in accelerating climate change, which has had a significant economic impact. 

The waters have receded from the United States to Italy and China. The loss of waterways puts shipping routes, agriculture, energy supplies and even drinking water at risk. The Indian food industry is poised for massive growth with its contribution to the global food trade increasing year after year due to its enormous potential for value addition, particularly in the food processing industry. The Indian food processing industry accounts for 32 per cent of the country’s total food market and is one of the country’s largest industries. It ranks fifth in terms of production, consumption, export and expected growth. The Indian food and grocery market is the world’s sixth-largest with retail accounting for 70 per cent of total sales. 

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