Decoding the FDI policy liberalization in food retail

While agriculture employs almost half of India’s population, it contributes only about 14% to the nation’s GDP, resulting in low per capita income of the workforce engaged in the sector. And, while India produces a significant proportion of several of the world’s crops, its yields for certain crops are low.

Besides low productivity, the key challenges facing Indian agriculture include low pricing for agricultural produce, with only a small fraction of the final price reaching farmers, and consequent lack of investment in and access to modern infrastructure. Wastage of post-harvest agricultural produce also remains a significant challenge.

In this context, the foreign direct investment (FDI) policy liberalization, through Press Note 5 of 2016, to permit 100% FDI with Foreign Investment Promotion Board approval in marketing of food products produced and manufactured in India, is a welcome move.