Agro-based Industries in India: Bridging the Gap Between Agriculture and Economy

Table of Contents

• What are Agro-based Industries?
• What is the Importance of Agro-based Industries?
• What are the Main Types of Agro-based Industries?
  • Agro-produce Processing Units
  • Agro-produce Manufacturing Units
  • Agro-inputs Manufacturing Units
  • Agro Service Centres
• What are the Major Agro-based Industries in India?
  • Textile Industry
  • Food Processing Industry
  • Dairy Industry
  • Agri-input Industry
• What are the Top 10 Agriculture Companies in India?
• What are the Challenges in Agro-based Industry?
• What are the Schemes for Agro-based Industry?

What are Agro-based Industries?

Agro-based industries are the industries that use agricultural products as their raw materials for manufacturing products like biofuels, food, textiles and other value-added goods. These industries are part of the agriculture sector, which collectively contributes around 18% to India's GDP. They are mostly consumer-based industries as the agricultural product manufactured is directly sold to the consumers.

Agro-based industries are directly or indirectly linked to agriculture. These industries not only add value to the agriculture products but also generate significant employment opportunities and ensure overall development of rural areas in India. In this sense, they are the critical bridge between the broader economy and the agriculture sector.

What is the Importance of Agro-based Industries in India?

The former Vice-President of India M Venkaiah Naidu in one of his addresses had said that “agro-based industries are important for generation of employment in rural areas and augmenting the income of farmers”. Besides, it has an important role in the sustainable development of India. Let us see some of critical roles of these industries.

• They help create job opportunities in areas with limited source of alternative income opportunities. Besides, they also help check rural-urban migration.
• These industries help create demand for the agricultural products, thus boosting the overall production and providing higher returns to the farmers. As a result, the standard of living of people dependent upon agriculture improves and overall economic growth is high.
• They have the potential to contribute to the overall GDP of the country as they add value to the agricultural products through processing and manufacturing.
• They empower farmers and rural community by creating value chains and providing market access.
• These industries also are a great tool of women empowerment as many agro-based industries employ women on a substantial basis.
• They help foster food security in the nation by providing a steady supply of processed foods essential for rural and urban populations.
• These industries also are key to sustainable development as they adopt many sustainable farming practices and use renewable resources on a large scale.

What are the Main Types of Agro-based Industries?

There are mainly four types of Agro-based industries. Let’s understand each in more detail.

Agro-produce Processing Units

• What they do: Process raw materials which can be stored for later use and can be transported at cheaper costs.
• Example: Rice Mills and Dal Mills

Agro-produce Manufacturing Units

• What they do: Manufacture new products which are entirely different from the original raw material.
• Example: Textile Mills, Sugar Factory and Bakery

Agro-inputs Manufacturing Units

• What they do: Improves the agricultural productivity of the manufactured products.
• Example: Fertilizer and Pesticide Unit, Agricultural Implements, Seed Industries

Agro Service Centres

• What they do: Repairs and maintain the agricultural implements and farm related equipment.
• Example: Repairing & Servicing of Pump Sets, Diesel Engines, Tractors and all type of Farm Equipment

What are the Major Agro-based Industries in India?

Textile Industry

Textile industry is one of the major contributors of the economy to the nation in GDP growth and foreign exchange. It contributes around 4% to the GDP of the country. This industry is self-reliant and generates everything from raw material to the final goods for their own customers.

In this industry, the raw materials are cotton, silk, jute and sometimes artificial fibre and the final products are clothes, household items etc.

The textile industry involves spinning, weaving, processing, and apparel manufacturing. Maharashtra and Gujarat are the top cotton textiles producing states in India.

Food Processing Industry

Indian Food processing industry is one of the biggest food processing industries in the world. Sugar, tea, coffee and oil are some of the major foods producing industries in India.

Sugar industry contributes to 17% of the total production in the world, while Tea and Coffee production are also holding the significant place as coffee leads 70% of overall manufacturing towards the global market, making it the third-largest coffee producer in Asia and tea contributes to an overall 23% of the total production in the world.  The vegetable oil business produces around 5% of the world’s vegetable oil. Madhya Pradesh is the largest state in oilseed processing.

Overall, the states of Maharashtra, Uttar Pradesh, Andhra Pradesh, Tamil Nadu, and Gujarat are the leading contributors to this sector.

Dairy Industry

Dairy industry in India contributes almost 4% to India’s GDP. India is the largest producer of milk with production of around 239 million metric tonnes. The Indian dairy market is amongst the largest and fastest growing markets in the world. Uttar Pradesh is the highest milk producing state in India followed by Rajasthan, Madhya Pradesh, and Gujarat.

In this business, the raw material is milk, but the finished products are paneer, curd, cheese, butter, etc.

Agri-input Industry

The agriculture input industry is another important Agro-based industry of India. These are the external resources used to promote the overall crop and livestock production. The use of machineries, tractors, fertilizer and pesticides, seed processing inputs all are essential part of the agricultural practices.

India’s Agri-inputs market alone boasts a significant 44 billion dollars valuation, driven by over 5 lakh Agri-input retailers serving as vital sources for farmers.

What are the Top 10 Agriculture Companies in India?

1. Amul
2. ITC Agribusiness Division
3. Shree Renuka Sugars Ltd.
4. Godrej Agrovet Ltd.
5. Jain Irrigation Systems
6. UPL Ltd.
7. Rallis India Ltd.
8. Mahindra Agribusiness
9. Arvind Ltd.
10. Suguna Foods Pvt Ltd.

What are the Challenges in Agro-based Industry?

• Seasonal changes, crop vulnerability and changes in cropping pattern.
• Financial constraints and uncertainty about future market demands.
• Lack of the supply of same variety of fruits and vegetables in bulk.
• Absence of information about the quality and quantity of the market.

What are the Schemes for Agro-based Industry in India?

• Scheme for Capacity Building in Textile Sector (SAMARTH)- This is a flagship scheme by the Ministry of Textile, Govt. of India to provide skills and training to the people in creating jobs and to provide livelihood to all sections of the society across the country.
• Production Linked Incentive (PLI) Scheme - The PLI Scheme is intended to promote production of MMF Apparel & Fabrics and Technical Textiles products in the country. Its aim is to create job opportunities for the people of India.
• Pradhan Mantri Kisan SAMPADA Yojana (PMKSY)- The objective of PMKSY is to supplement agriculture, modernize processing and decrease Agri-Waste.
• Production Linked Incentive Scheme for Food Processing Industry (PLISFPI)- This is a central scheme and helps to support creation of global food manufacturing champions corresponding with India’s natural resource endowment and support Indian brands of food products in the international market.