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The FDI Inflows to Agriculture Services are allowed up to 100% and allowed through the automatic route covering horticulture, floriculture, development of seeds, animal husbandry, pisciculture, aqua culture, cultivation of vegetables, mushroom and services related to agro and allied sectors. Only in Tea sector, 100% FDI is allowed, including, plantations of tea.
In India, agriculture is an important sector of the Indian economy and accounts for almost 19% of Indian gross domestic products (GDP). Agriculture is the main stay of the Indian economy as it forms the backbone of rural India which inhabitants more than 70% of total Indian population.
The Ministry of Agriculture, the Ministry of Rural Infrastructure, and the Planning Commission of India are the main governing bodies that define the future role of agriculture in India and it aims at developing agricultural sector of India. No FDI / NRI / OCB is allowed in the Indian Agriculture sector. Only in Tea sector 100% FDI is allowed, including plantations of tea. This requires Government of India approvals. Further, it requires compulsory divestment of 26% equity in favor of the Indian partner or Indian public within a maximum period of five years. This also requires approval from the concerned state government in case of change in use of land for such activities. And this holds true for any fresh investments in the above-mentioned sector.
FDI in Indian agriculture sector and the latest developments are as follows:
- 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 agro and allied sectors
- Farm credit target of Rs.225,000 crore for 2007-08 has been set with an addition of 50 lakh new farmers to the banking system
- 35 projects have been completed in 2006-07 and additional irrigation potential of 900,000 hectares to be created and training of farmers arranged
- A pilot programme for delivering subsidy directly to farmers have been arranged
- Loan facilitation through Agricultural Insurance and NABARD has also been facilitated
- Corpus of Rural Infrastructure Development Fund to be raised
FDI Inflows to Agriculture Services also facilitated growth of other allied areas, like the following:
- Irrigation
- Roads
- Housing
- Water Supply
- Electrification
- Telecommunication Connectivity
FDI Inflows to Agriculture Services has effected development of rural infrastructure, like -
- To connect 66,800 habitations with population over 1000 with all weather roads
- To construct 1,46,000Km of new rural roads
- To upgrade and modernize 1,94,000Km of existing rural roads
- Total investment of Rs. 1,74,000 crore envisaged under "Bharat Nirman", investment on rural roads estimated to be at Rs. 48,000 crore
- To provide corpus of Rs. 8000 crore to Rural Infrastructure Development Fund (RIDF)
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