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Why Is FDI Important For The Agricultural Sector

Why Is FDI Important For The Agricultural Sector

Here we explore why FDI is necessary for a country’s economy and especially for India’s agricultural segment, which sustains the livelihood of the majority of India’s population.

Agriculture is the central pillar on which the nation is built upon. It sustains the country’s entire population and contributes significantly to its income. To enhance this sector, FDI in agriculture sector in India has always been a primary focus of every government.

An overview

The agriculture sector accounts for nearly 19 percent of India’s GDP. India possesses the second-largest amount of agricultural land in the world (157.35 million hectares). It is also one of the 15 leading exporters globally.

The segment employs more than 50 percent of India’s population, providing sustenance to the entire country. Hence, it is necessary to support our farmers to ensure the continuous growth of the nation.

Role of FDI

Foreign direct investment (FDI) provides the most favorable way to boost a company or a sector. The agricultural industry is among the most crucial segments when it comes to foreign investments since India is predominantly an agrarian economy.

To keep the Indian agricultural system up-to-date with the rest of the world, foreign capital inflow is essential because of the following reasons:

  •       To take advantage of modern scientific and technological advancements – As the world progresses at breakneck speed, our farmers and the farming capacity of the country need to match up to the world. FDI helps in benefiting from the latest scientific research and farming technologies.
  •       To enhance the employment in the segment – As more people are employed in the sector, the agricultural prowess will grow and lead to countries worldwide looking towards the nation for farm products.
  •       To increase exports – The infusion of foreign capital results in the increased productivity of the sector and establishes the country as a leading exporter. India’s total agricultural and related commodities exports are valued at $41.25 billion for FY21.
  •       To provide access to new technologies – With the fast-moving technological age, farmers must be provided with contemporary technologies to help grow production.

FDI in Indian agricultural activities

As per the current government regulations, 100% FDI in agriculture sector in India is allowed through the automatic route in the following activities:

  1. Horticulture, floriculture, apiculture and farming of vegetables and mushrooms
  2. Animal husbandry, fish farming, and aquaculture
  3. Development of seeds
  4. Services related to agriculture and allied sectors

In addition, foreign investments up to 100% are allowed through the government route in the tea sector, including tea plantations.

Methods to get FDI for agro businesses

To get foreign capital approved, you can get yourself registered on the Foreign Investment Facilitation Portal (FIFP) to get started. However, you need to take care of many guidelines and regulations which might prove difficult.

FDI India is one of the leading foreign investment facilitators that helps connect suitable foreign investors with Indian businesses. From procuring foreign funding for your business to getting the required government approval, we will be with you every step of the way.

Get in touch with us to get FDI in agriculture sector in India and contribute to the country’s meteoric economic growth.

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