OPPORTUNITIES FOR GLOBAL MULTINATIONAL COMPANIES IN INDIA’S FARMTECH SECTOR
Agriculture is the backbone of the Indian economy with 58% of the rural population employed in the sector. In financial year 2016, agriculture and allied sectors contributed USD 244.74 billions and continued to grow at 6.64% during financial years 2007-16. In fact, India holds the second largest share of agriculture land with 157.35 million hectares of land. India is also a leading contributor to global food market. For instance, when it comes to spices and spice products, India is the largest producer, consumer and exporter. It is also the second largest fruit producer in the world as its fruit production has grown faster than vegetable production.
How to enter India’s farmtech sector in a the right way?
With agricultural products constituting nearly 10% of the exports of the country, India is one among 15 leading exporters of agricultural products world-wide. In financial year 2016, the total agricultural exports grew at a CAGR of 19% to reach USD 32.08 million.
Given the quintessential importance of agriculture for the Indian economy, the Government of India in Budget of financial year 2017-18 has given due regards to sustainable development measures.
On a year-to-year basis, the total allocation for the agricultural, allied and rural sectors has been increased by 24% to INR 187,223 crore or USD 28.10 billion. National Bank for Agriculture and Rural Development (NABARD) will set up a micro-irrigation fund with a corpus of INR 5,000 crore or USD 750 million. With an initial corpus of INR 2,000 crore or USD 300 million, a dairy processing fund of INR 8,000 crore or USD 1.2 billion will be set up over a period of three (3) years.
The allocation to Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has increased to INR 48,000 crore or USD 7.2 billion in the current financial year. The participation of women in the scheme has also been increased to 55%.
At a subsidized interest rate of 7% per annum, short-term crop loans up to INR 3 lakh or USD 4,500 will be provided to farmers. For timely repayments of loans, an additional incentive of 3% will be provided to farmers, thereby reducing the interest rate to 4%.
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