Indian Agriculture Sector: Investment, growth & future prospects

The GDP of India’s agricultural sector amounts to an impressive US$ 262 billion. The industry remains the single largest contributor to the Indian economy, although its share of GDP fell from more than 30 % in FY 91 to almost 14.5 % in FY 11. In order to promote the participation of the private sector, the Indian government allowed 100% foreign direct investment (FDI) in several segments of the agricultural industry. These include fertilizers, agricultural machinery, horticulture, seed development, livestock farming, fish farming, and F&V segment. The outpour of these private sector investments will benefit Indian farmers considerably, as most of them engage in small-scale enterprises and struggle to achieve profitability. These investments can be used to promote agricultural research and development and protect the environment, which could contribute to the overall increase in agricultural productivity . As a result of the 100% FDI allowance, the agricultural services sector saw foreign investments of US$ 1.5 billion over 2000–2012.

Apart from FDI being a major game changes, the green revolution in the 70’s actually played a pivotal role in making the nation self-sufficient. This was tagged with the usage of chemical-based agri inputs which made the farmers pay a hefty price over the coming year. The haphazard use of chemical made the soil infertile, led to the loss of productivity , environmental degradation, and lower yields eventually. Consumption of chemical fertilizers increased from 151 kg/hectare in FY10 to 166 kg/hectare in FY12. This has not only caused an increase in yields but also led to the disruption of the ecological balance which the nation is trying to reverse by going chemical free. Several states have adopted the organic route and many are in pipeline.
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