FDI Inflows to Agricultural Machinery

FDI inflows in the Indian agricultural machinery and the subsequent development of the Indian agriculture sector is predicted to have a significant positive impact on the 700-million strong rural population, living in about 600,000 small villages of India.

Agriculture is an important sector of the Indian economy, which accounted for almost 19% of India's GDP in the financial year 2006-2007. The total quantum of foreign direct investment in the Indian agricultural machinery was US $ 135.50 million during the period from August 1991 to December 2005.

The overall percentage of such foreign direct inflow in the Indian agricultural industry was 0.43 of the total quantum of the FDI inflow during the same period. FDI inflows into agricultural machinery of India have resulted in the steady rise of the Indian agriculture industry in recent years. The Indian agriculture sector enjoys 100% FDI through the automatic route. The main authority that regulates and controls the inflows of FDI into the Indian agricultural machinery are the Ministry of Agriculture, the Ministry of Rural Infrastructure and the Planning Commission of India.

Important factors in FDI Inflows to Agricultural Machinery

Important aspects of the agrarian sector and rural sector in India that have a positive impact on FDI Inflows to Agricultural Machinery are

• 100% foreign direct investment (FDI) allowed through the automatic route covering horticulture, floriculture, development of seeds,
• animal husbandry, pisciculture, aqua culture, cultivation of vegetables, mushroom and services related to agriculture and sectors associated with it
• The target set for generating Farm credit for 2007-08 is ` 225,000 crores
• 50 lakh new farmers have been added to the banking system
• 35 projects have been completed in 2006-07
• Training facilities for the farmers arranged
• A pilot program for delivering subsidy directly to farmers to be introduced
• Loan facilitation through Agricultural Insurance Institutions and NABARD has also been extended
• Corpus of Rural Infrastructure Development Fund to be raised
• 66,800 habitations with population over 1000 is to be connected with all weather roads
• Construction of 1,46,000Km of new rural roads have been sanctioned
• Up gradation and modernization of 1,94,000Km of existing rural roads have been undertaken
• Investment to the tune of ` 1,74,000 crores envisaged under "Bharat Nirman"
• Investment on rural roads estimated to be at ` 48,000 crores
• A corpus of ` 8000 crores to Rural Infrastructure Development Fund (RIDF)have been extended

Last Updated on 4/23/2011