FDI in Agricultural Sector in Indian Scenario - Reframing of Strategy for Survival and Growth

Background: Agriculture is a very important sector of Indian economy and accounts for almost 19% of the Gross Domestic product. The year 1991 saw drastic changes in the policy being introduced in the area of financial sector, foreign trade, public sector and social sector. Although many agricultural sectors have been open to FDI since the early 1990’s, FDI in agriculture has not been significant. Objectives: Against this background the present study has been conducted by me so as to understand the FDI Inflow in the agricultural sector during and before the recession period. The major objectives that are focused in the present paper are – 1) Analyses of the FDI inflows into agricultural sector from 1991 to March 2009. 2) Analysis of the monthly FDI inflow in the agricultural sector in 2007-08 and 2008-09. (Recession period). 3) Overall agriculture investment in India compared with other countries especially China and Brazil. 3) Trend in Agricultural Investment in India taking into consideration both public and private investment. Research Methodology: The data has been analyzed using various statistical tools like correlation, regression analysis, and trend analysis (using least square method) so as to draw valid conclusion. Source of Data: The data relevant to the study has been collected from various sources like the report of the Ministry of Commerce and Industry, the department of Industrial promotion and policy (DIPP), the government of India, Centre of Monitoring Indian Economy (CMIE), RBI, and Journals. Information has also been taken from World development reports and World Investment Reports. Finding / Results: One of the major concerns highlighted by the paper reflects to the fact that the output and investment in the agriculture is not showing robust growth as in overall economy. The paper suggests the government has to take certain innovative steps for survival and growth of overall agricultural sector. One of the methods suggested by the paper is to allow FDI equity inflows in the agri- business, agricultural infrastructure, services which can be expanded by introducing more advanced technology