Agriculture & Allied Sector in India: Size, Growth, and Demand
Agriculture & Allied Sector in India: Size, Growth, and Demand
Blog Article
India’s Agriculture & Allied Sector is the backbone of the nation’s economy, providing livelihoods to millions and ensuring food security for its vast population. With a rich history of farming traditions and a diverse range of agro-climatic zones, India has emerged as one of the world’s largest agricultural producers. This article explores the current size, growth trends, and demand dynamics of the sector, offering insights into its critical role in India’s economic landscape.
Market Size of India’s Agriculture & Allied Sector
The Agriculture & Allied Sector in India is a cornerstone of the economy, contributing significantly to the country’s Gross Domestic Product (GDP) and employment. As of 2024, the sector accounts for approximately 18% of India’s GDP, underscoring its importance despite the rapid growth of other industries like services and manufacturing. The sector’s market size is projected to reach USD 391.21 billion in 2025, with expectations to grow at a Compound Annual Growth Rate (CAGR) of 4.90%, reaching USD 496.93 billion by 2030.
Employment-wise, the sector is a major source of livelihood, engaging around 42.3% of the workforce. This includes not only crop cultivation but also allied activities such as animal husbandry, forestry, and fisheries. India’s agricultural landscape is diverse, with the country being one of the largest producers of key crops like rice, wheat, pulses, and sugarcane. Additionally, India holds the title of the world’s largest producer of milk and the second-largest producer of fruits and vegetables.
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Growth Trends in the Sector
The Agriculture & Allied Sector has shown resilience and steady growth, with an average annual growth rate of 4.18% over the last five years. This growth is driven by several factors:
Technological Advancements: The adoption of modern farming techniques, including precision farming, AI, drones, and remote sensing, has enhanced productivity. For instance, the Indian government launched the Krishi-Decision Support System (Krishi-DSS) in 2024, a digital platform providing farmers with real-time data on weather, soil health, and water levels.
Government Policies: Initiatives like the Pradhan Mantri Kisan Sampada Yojna and the Agriculture Infrastructure Fund have been instrumental in improving infrastructure, reducing post-harvest losses, and enhancing market access for farmers.
Diversification: Farmers are increasingly diversifying into high-value crops such as fruits, vegetables, and organic produce. The introduction of new crop varieties, like those by Punjab Agricultural University in 2022, has further boosted yields and income.
Export Growth: India’s agricultural exports have seen a significant uptick, reaching USD 53.1 billion in 2022–23. The sector’s export potential is bolstered by the rising global demand for Indian spices, rice, and organic products.
However, the sector faces challenges, including climate change, water scarcity, and fragmented landholdings, which can hinder productivity. Despite these hurdles, the sector’s growth trajectory remains positive, supported by ongoing reforms and investments.
Demand Dynamics: Domestic and Global Perspectives
The demand for agricultural products in India is driven by both domestic consumption and export opportunities:
Domestic Demand: With a population of over 1.4 billion, India’s domestic food demand is immense. The per capita consumption of vegetables, for example, has risen steadily, with the Ministry of Agriculture reporting an increase from 388.7 grams per day in 2017–2018 to 400 grams in 2020–2021. Additionally, the growing middle class and rising health consciousness have spurred demand for organic and nutrient-rich foods.
Export Potential: India is a key player in the global agricultural market, exporting products like basmati rice, spices, and processed foods. In 2024–25, agricultural exports stood at USD 4.34 billion for April-May alone. The country’s agritech sector is also gaining traction, with investments expected to reach USD 30–35 billion by 2025, further enhancing export competitiveness.
Shifting Consumer Preferences: There is a growing trend towards sustainable and organic farming, driven by consumer awareness. The organic food segment is projected to grow at a CAGR of 10% from 2015 to 2025, reaching USD 9.1 billion by 2025.
These demand drivers highlight the sector’s potential for continued expansion, both within India and on the global stage.
Government Initiatives Supporting the Sector
The Indian government has implemented several initiatives to bolster the Agriculture & Allied Sector:
Financial Support: Schemes like the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) provide direct income support to farmers, while the Agriculture Infrastructure Fund aims to improve post-harvest management.
Digital Transformation: The Digital Agriculture Mission and the issuance of Kisan Credit Cards (KCC) in select states are steps towards modernizing the sector and improving access to credit.
Sustainability Focus: The government is promoting natural farming, with plans to introduce 1 crore farmers to these practices over the next two years. Additionally, 10,000 bioinput resource centers are set to be established to support sustainable agriculture.
These initiatives are designed to enhance productivity, ensure food security, and improve farmers’ incomes, aligning with the broader goal of doubling farmers’ income by 2025.
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Future Outlook: Opportunities and Challenges
The future of India’s Agriculture & Allied Sector is promising, with several growth areas on the horizon:
Market Projections: The sector is expected to reach USD 496.93 billion by 2030, driven by technological adoption and increased investments in agritech.
Sustainable Practices: The shift towards natural and organic farming is likely to gain momentum, supported by government policies and consumer demand.
Precision Farming: The use of AI, IoT, and data analytics in farming is set to revolutionize the sector, improving efficiency and reducing resource wastage.
However, challenges such as climate change, water scarcity, and the need for better infrastructure remain. Addressing these issues will be crucial for sustaining growth and ensuring the sector’s long-term viability.
Conclusion
India’s Agriculture & Allied Sector is at a pivotal juncture, balancing traditional practices with modern innovations. With a market size projected to exceed **USD 496 billion by 2030**, the sector offers immense opportunities for growth, driven by technological advancements, government support, and evolving consumer preferences. As India continues to strengthen its position as a global agricultural powerhouse, the sector’s role in ensuring food security and economic stability will only become more critical.
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