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The agriculture and food processing industry in India is known as the “sunrise sector” of India as it is one of the largest industries when it comes to production, consumption and export. Major portions of the agriculture and food processing industry in India cover fruits and vegetables, poultry, meat processing, dairy industry, fisheries and food retail, etc. India has huge growth potential and offers huge opportunities for investments in the food retail sector. The agriculture and food processing industry enjoys favourable economic policies and attractive fiscal incentives. India has the sixth-largest Food and Grocery market in the entire world and constitutes almost 65% of India’s retail market. The Economic Survey of 2021-22 stated that the food processing industry has been growing at an annual growth rate of 11.18% for the last 5 years.
Foreign Investments in Agriculture and Food Processing Industry
Under the current Foreign Direct Investment Policy (FDI Policy) in India, 100% FDI in the agriculture and food processing industry is permitted through the automatic route. For tea plantations or the tea sector and for the manufacture of food products to be traded via e-commerce, 100% FDI is permitted only through the Government route. FDI in the food processing industry increased by 86% in the Financial Year (FY) 2022 as compared to the previous year. This industry has witnessed an equity inflow of USD 709.72 million in FY 2022. At present India is the second best option for foreign investors and might soon be on the top of the list as China which is at present the number one option for foreign investors is regulating its food market by curbing exports and increasing stock for local consumption due to shortage in their country. The agriculture and food processing industry in India experienced robust growth during COVID-19. This has facilitated even greater FDI in this sector.
The Agriculture and Food Processing Industry in India is the sixth largest in the world. India is ranked fifth when it comes to production, consumption, exports, etc. The Indian Agriculture and Food Processing Industry emerged as a high-growth and high-profit sector. Indian government via the Ministry of Food Processing Industries (MoFPI) has taken several measures to encourage investments in this industry by approving proposals for foreign ventures, foreign collaborations, industrial and trade licenses and 100% export-oriented units. The Gross Value Addition (GVA) in the food processing industry has compounded at a rate of 7.27% from FY 2016-17 to 2020-21. The online food market is also experiencing exponential growth with online food platforms such as Swiggy, Zomato, FoodPanda, etc.
Government Policy and Measures
To boost the agricultural and food processing industry in India, the MoFPI is taking several necessary steps. Boosting foreign investment in Agriculture and Food Processing industry in India plays an essential role in connecting Indian farmers to not just national consumers but also international consumers. Some of the measures taken by the government are as follows:
Food processing projects
Role of FDI in Agriculture and Food Processing Industry in India
Foreign Investments in Agriculture and Food Processing Industry give a favourable boost to the growth and development of a country. Since India is predominantly an agrarian economy, foreign investments play a crucial role such as:
Foreign Investments provide great opportunities for the Indian economy. As India has always been an agrarian economy by nature, foreign investments boost the agriculture and food processing industry. However, it was only after Covid-19 struck, it was realized that the agriculture and food processing industry is one of the most sustainable among all the sectors which led to greater investment in this sector. At present a conclusion can be drawn that India’s environment for foreign investment in the agriculture and food processing industry is favorable.
Read our Article:Foreign Investments from Neighbouring Countries in India
Ankita is an Advocate and has joined Enterslice as a Legal Researcher. Her work focuses on General Civil and Commercial laws, Corporate Taxation Laws, Labour and Employment Laws and Dispute Resolution. She is a law graduate from School of Law, University of Petroleum and Energy Studies. Prior to joining Enterslice, Ankita has the experience of practicing law in Delhi and Odisha.
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