The agriculture industry in India reached a value of INR 44,720 Billion in 2017. The market value is further expected to reach INR 89,380 Billion by 2023, exhibiting a CAGR of 12.2% during 2018-2023.
The agriculture industry represents an important component of the Indian economy both in terms of its contribution to the GDP as well as a source of employment to the majority of the country's population. This sector is currently showing immense opportunities, with India presently being one of the world's largest agricultural producers by value.
A number of transformations have taken place in this sector over the past few decades. These include - rising penetration of the organized sector, growth in contract farming, agriculture becoming more mechanized, easy loan facilities, rise of exports, use of agrochemicals and high yielding seeds, and an increasing role of the private sector in processing, branding and marketing, etc.
Indian Agriculture Industry: Market Drivers
The emergence of modern retail has also been an important catalyst for the agriculture industry. Modern retail helps in the elimination of middle men from the distribution chain, thereby providing better remuneration to the farmers. Organized retail enables the farmers to directly sell their produce to modern organized retail networks, thereby helping them to get a better price as compared to small-scale local vegetable markets.
These retailers have also started signing supply agreements with various farmers which further assures them of a minimum income. Moreover, these agreements help farmers in reducing wastage, transportation costs and providing fresh supply of food items to the consumer.
The establishment of rural banking and credit system has also played a pivotal role in the growth of the agriculture industry. The transformation of agriculture from subsistence to commercialisation requires investment on the farm along with the use of modern inputs. With the availability of credit, the constraint on certain inputs like seed, fertilizer, pesticides, hired labour, etc. has been reduced.