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Asia Pacific Journal of Marketing & Management Review

Vol.1 No. 2, October 2012, ISSN 2319-2836
THE ENVIRONMENT FOR AGRICULTURAL AND AGRIBUSINESS

INVESTMENT IN INDIA: POLICY IMPLICATIONS OF KARNATAKA
DR. H. RAMAKRISHNA*
*Associate Professor,
Department of PG Studies in Commerce,
Smt. Saraladevi Satischandra Agarwal
Government First Grade College,
Bellarly, Karnataka, India.
ABSTRACT
The Government of Karnataka has developed Integrated Agribusiness Development Policy in
2011 covering agriculture and allied sectors By admitting the constraints and drawbacks in
Supply Chain Management (SCM), post-harvest losses and agri-exports, the government has
expected substantial changes in terms of technology, markets, institutions and policy and in turn,
to increase in income of farmers, states GDP, better value addition and above all the food
security. Among others the strategic objectives of the policy are: Substantial increase in
investment to the sector to increase agricultural value chain. Creation of favorable business
environment for private sector to take part in research related activities and agro-ecological
activities. Policy also aims to bring modernization in existing agri-infrastructure, cold chain,
controlled atmospheric storage, refrigerated, transport, agri-clinics, food processing corridor.
Agri-business investment regions, food parks, agri-SEZs etc, agro-based industry including dry
land farming, precision farming. To make the agri and allied sectors more effective, the policy
had given much importance for the prorate investment dose. The strategic view is to what extent
the sector will get more private investment from foreign as well as domestic investor to boost
agro-exports at par with the global standards.
Agribusiness include not only those that farm the land but also the people and firms that provide
the inputs for example, seed, chemicals, credit etc. process the output for example milk, grain,
meat etc., manufacture the food products for example ice cream, bread, breakfast cereals etc.,
and transport and sell the food products to consumers for example restaurants, supermarkets.
A business that earns most or all of its revenues from agriculture. An agribusiness tends to be a
large-scale business operation and may dabble in processing and manufacturing and/or
the packaging and distribution of products. Agribusiness is synonymous with corporate farming.
It combines the words agriculture and business and it involves a range of activities and methods
used involving modern food production. This involves farming, seed supply, agrichemicals, farm
machinery, wholesale and distribution of products, processing, marketing, and retail sales. They
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INTRODUCTION
www.indianresearchjournals.com
KEYWORDS: agri, agro, agriculture, FDI, investment.
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do not necessarily take into consideration environmental and social best practices when doing
business. Their ultimate result for their bottom line is profit.
REVIEW OF LITERATURE
Before we come up with the objectives and other aspects of the study, let us observe the
important studies already completed in this area. Braun et al (2005) have observed the strategic
issues and reform option for Indian agriculture and rural development. It has been addressed the
need of increasing investments in rural infrastructure and to promote pro-poor rural and
agricultural development. At the end, in the study it has been advised India to go for increase
investments in rural infrastructure, reorient its social safety nets to create more employment in
rural area and trade liberalization. The International Food Policy Research Institute (IFPRI) has
recommended to increase investments in rural infrastructure including transport and information
technology that connects villages and agricultural R & D. The study has advocated the necessity
of liberalizing its marketing and trade policies to encourage coordination between farms, firms
and forks (super markets) increased inflow and rural credit especially to small holders through
Non Banking Financial Corporations
NEED OF THE STUDY

India and China are the two largest agrarian economies in the world. Foreign investment
is flowing to both the nations. No doubt, the policy reforms with regard to capital, human
resource, and foreign nations certainly influence on the flow of foreign capital. The agriculture is
the backbone of India-the emerging economy. More than 70% of the Indian population depends
upon agriculture. Despite the tremendous development in agriculture, the Indian agriculture
sector is not in a position to achieve self sustenance. The reasons are many. It may be due to
more dependence on traditional method of cultivation, more hurdles to come out from the
101
Pray and Latha Nagarajan (2012) International Food Policy Research Institutes (2012)
study on Innovation and Research by Private Agribusiness in India focuses on the private
innovations and its contribution to the agricultural productivity and incomes. The study has
disclosed that Research and Innovation by private industry led to the boom in cotton exports and
to rapid increases in exports of generic pesticides and agricultural machinery. Similarly increases
in innovation and Research and Development were led to increases in demand for agricultural
products, and in turn demand for land, labor and water saving inputs. Ultimately this will be
allowed large Indian Corporations, business houses, and foreign firms to invest in Agriculture
and Agribusiness.
The study of Sharmas (2008) on Indians agrarian crises and corporate led contract
farming has explored the determinants of participation in contract farming in order to observe
whether contract farming affects the farm income or not. The study has focused on contract
farming and its importance in the present context. Contract farming enable farmers to access
better quality inputs such as seeds, fertilizers, pesticides, extension services and credit from the
corporate sector. The study has concluded that there is a need to promote non-political farmers,
organizations to improve small holders bargain power as well reduce transition costs to
agribusiness companies.
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religious dogma, improper plans by the policy makers, underdeveloped agricultural markets,
more restrictions in inviting private capital to boost agriculture sector and many more. The
income from agriculture is shrinking. At the same time the debt of the farmer is rolling year by
year. Therefore, the agriculture sector needs to be overhauled with private investment touch.
Hence, the analysis of the present study looks in to the need of private investment for agriculture
and agribusiness investment into India in general and the state of Karnataka in particular.
OBJECTIVES OF THE STUDY
The following objectives have been set for the present study:
1. To know the business environment for private sector to take part in research related
agricultural activities.
2. To analyze the wave of FDI in agriculture
3. To understand the options available for private investment in the newly introduced
Integrated Agribusiness Development Policy (IADP) 2011 of the Government of
Karnataka
METHODOLOGY
The present study is based on secondary data. We have analyzed the Integrated
Agribusiness Development Policy (IADP) 2011 of Government of Karnataka from the
investment angle. We have also used policy research of working papers of United States
Department of Agriculture, Economic Information Bulletin, Economic Research Service etc. we
have also used the policy measures available in International Food Policy Research Institute
(IFPRI).
No FDI/NRI investment permitted other than tea sector

The FDI permitted in tea sector including tea plantations with prior Government approval
Equity allowed under automatic approval route was 100%
102
Indian Investment Regulation presently permits 100% FDI in most of the sectors and in most
cases with automatic approval. Key agricultural areas where FDI is currently not permitted viz.
agricultural production except for floriculture, horticulture, development of seeds, animal
husbandry, fisheries, cultivation of vegetables under controlled conditions, tea plantations and
services related to agriculture and allied sectors. FDI policy on Agriculture and allied activities
has been changed from time to time. For example, the important features of FDI policy of 2005
with regard to agriculture and allied sectors were:
FDI POLICY
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But, the policy of FDI on agriculture has been changed during 2011. Let us observe the FDI
Policy on Agriculture and Animal Husbandry-2011.
TABLE: GOVERNMENT RESTRICTIONS ON LARGE INDIAN FIRMS, IMPORTS OF
TECHNOLOGY AND FOREIGN DIRECT INVESTMENT
Sector
1980s
Mid-1990s
Seed/biotech
Reserved until 1986.
Large
Indian
and
Foreign
Direct
Limited vegetable seed Investment
(FDI)
imports.
allowed
in
joint
ventures with Indian
Other seed imports firms.
prohibited.
Vegetable seeds Open
General
Licensing
(OGL).
Limited imports of
coarse
grain
and
oilseed seed.
Current
FDI allowed 100%
under noncontrolled
conditions since
April 2011.
Import of vegetable
seeds and other
seeds and planting
material allowed
under OGL.
Government imports of
rice, wheat seeds.
50%
formulation
reserved for
small industry.
No imports of
formulated
products.
Product
patenting
AI imports with
35% tariff.
No imports of
formulated
products.
No reservation
for small scale.
Customs duty
on imports as
high as 65%.
Imports
of
formulated products
allowed since 2004.
100% FDI allowed
through automatic
route since 2008.
Customs duty on
imports slashed to
7.5%.
Maximum
excise
duty is 15%.
Joined
TRIPS
WTO regime in
2005.
New Active
Ingredients
(AIs) allowed
for limited time
at 150% tariff
and then must
manufacture in
India.
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Pesticides
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abolished in
1970.
Fertilizer
Restricted
to Same as 1980s.
cooperatives
and
Indian domestic firms.
Since 2005, 100% FDI

allowed.
Imports controlled by
government
under
Foreign
Exchange
Regulation
Act
(FERA).
Agricultural
Machinery
No imports and
restricted under
FERA.
Equipment
reserved
for
small-scale
domestic
enterprises.
No imports.
No reservation
on equipment.
Some
imports
allowed, especially
small
equipment,
including
power
tillers.
FDI allowed.
100%
foreign
ownership allowed.
Foreign firms
allowed in joint
ventures
for
tractors.
Import
restrictions 19992000
grandparent
Grandparent
stock imports allowed
stock imports continued.
under OGL.
restricted.
Sugar
Reserved for smallscale and cooperative

sectors.
Sugar industry
de-licensed in
1998.
Large
Indian
companies
can
invest outside.
Sugar
restricted.
Reserved until
1998,
when
deregulation
started.
FDI allowed up to
100% through the
automatic route.
imports
Quantitative
restrictions on
Import duty on
sugar up to 60%
since April 2011
Tariffs at 25%.
Parent
stock
imports banned.
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Poultry
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exports
removed.
(previously removed
in 2009).
Futures trading
for
sugar
introduced.
Food
Processing
and
Reserved for
scale sector.
small- Reserved until 1998.
FDI still prohibited in retail

food markets.
Supermarkets
Source: compiled from the FDI policy of India of various years.
FDI POLICY ON AGRICULTURE AND ANIMAL HUSBANDRY-2011
FDI is permitted up to 100% on the automatic route, subject to applicable laws/sectoral
rules/regulations/security conditions. 100% FDI is allowed via Automatic Approval. In case of
agriculture and animal husbandry sector, the allied sectors like floriculture, horticulture and
cultivation of vegetables and mushrooms under controlled conditions, development and
production of seeds and planting material. 100% FDI is also permitted in animal husbandry
(including breeding of dogs), pisciculture, aquaculture under controlled conditions and services
related to agro and allied sectors. Any import of genetically modified materials shall be subject
to the conditions laid down in the notifications of Foreign Trade (Development & Regulations)
Act, 1992. Import of materials shall be in accordance with the National Seeds Policy. Poultry
breeding farms and hatcheries where micro climate is controlled through advanced technologies
like incubators, ventilation systems etc.
1. Substantial increase in investment is expected to improve the agricultural value chain

and has assumed drastic decrease in transaction costs.
2. Creation of favourable business environment for private sector to take part in research
related activities and agro-ecological activities.
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The Govt. of Karnataka has developed Integrated Agribusiness Development Policy

(hereafter called IADP) in 2011 covering agriculture and allied sectors (like horticulture,
fisheries, animal husbandry, sericulture and food processing etc). By admitting the constraints
and drawbacks in Supply Chain Management (SCM), post-harvest losses and agri-exports, the
government has expected substantial changes in terms of technology, markets, institutions and
policy and in turn, it has also expected to increase in income of farmers, states GDP, better
value addition and above all the food security. The IADP-2011 came into existence from 22-022011. The strategic objectives of the policy are:
AN OVERVIEW OF INTEGRATED AGRIBUSINESS DEVELOPMENT POLICY

(IADP)-2011 OF KARNATAKA
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3. Modernisation of existing agri-infrastructure in the state: Policy aims to bring

modernisation in existing agri-infrastructure, cold chain, controlled atmospheric
storage, refrigerated, transport, agri-clinics, food processing corridor. Agri-business
investment regions, food parks, agri-SEZs etc, agro-based industry including dry land
farming, precision farming, extensive IT & GIS application in agriculture and farming
solutions.
4. Boosting agro-exports by meeting EU, HACCP, & other international standards
5. Emphasizing small scale agro-based units to remain competitive in global market
6. Inviting private investments in Agriculture and allied sectors
AN ANALYSIS OF INTEGRATED AGRIBUSINESS DEVELOPMENT POLICY (IADP)2011 OF KARNATAKA FROM PRIVATE INVESTMENT ANGLE
for Options available for private investments
1.
Agri-Infrastructure: Include both

infrastructure and industrial segments
pertaining to agriculture, horticulture,
agro-forestry, animal husbandry,
fisheries, sericulture, apiculture, and
food processing sectors
Modernisation proposed in the IAD
Policy-2011:
Post-harvest
infrastructure,
cold
chain,
controlled
atmospheric
storages, grading and packing halls,
refrigerated transport, warehouses,
agri-clinics, product certification
centers, agri-education hub, center of
excellence for R & D, agri-investment
regions, food parks, agri-SEZs, agrilogistics, retail outlets for perishable
and non-perishable products.
2.
Development of agri-infrastructure is
proposed in the policy through PPP for
greater opportunities in agribusiness.
Proposed to create world class supply
chain infrastructure for providing
impetus to the development of agri and
allied sectors through development of
post-harvest
infrastructure,
agrocorridor etc.
Upgrade, modernize and augment
existing
industrial
infrastructure,
environment infrastructure, specialized
infrastructure
Development of agro-based industry Project opportunities for investment in IADPincluding food processing units
2011
1. Investment in agriculture and
allied sectors
Proposed to attract investments both in

infrastructure and industries, research
skill, development through a structured
Strategic
areas
viable
agribusiness development
106
Sl.
No.
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and transparent process

Creation of Special Purpose vehicle
(SPV) to facilitate agribusiness in
coordination with other agencies
Policy support and promotional
initiatives for value added agro and
food product exports
Single window clearance for investment
Proposed to conduct investors meet,
road show, trade fair regularly
specific value addition parks for

selective products and Brand building
for such products
Karnataka has competitive advantage

and well known for certain products
and they have geographic indication
also such as Bydagi chilies, coorg
honey, Rose onion, Nanjangudu
Rasabale. A strategic plan for
promoting & measures for exports.
Allowed cooperative & private sector to
set up value addition units & branding
besides setting up of Research Centers,
Quality Certification etc.
4.
Amendment to APMC Act to take up

Contract forming & Terminal markets
Proposed to take up contract forming by

private sector or other agencies within
the purview of APMC Act. An
amendment to APMC Act is proposed
to establish Terminal markets under
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3.
Special Purpose vehicle (SPV) :

Karnataka Agri-Business Development
Corporation (KABDC) proposed as
SPV to look after investment related
activities
including
conducting
investors meet, identifying project
opportunities
for
investment,
appointment of agencies & experts for
facilitating investment promotions,
periodical follow-up of investment
quarries etc.
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Food Processing Center corridor
With the aim of enhancing revenues to

farmers and employment potential to
local people, the Agri related & allied
corridors proposed along major
transport arteries. The corridor would
include the development nodes include
agribusiness investment regions(large
size of about 5000 acres covering food
parks, Agri SEZs, common processing
hubs etc.), Agribusiness investment
areas, Knowledge hubs, horti-tourism
zones, food parks, food SEZs, food
processing industries etc.
6.
Agri-Horti,
Animal
Husbandry,
Fisheries, Education and Knowledge
hubs
An ample opportunities created in the

areas including market information
center, R & D institutes, skill
development institutes, know-how
dissemination centers
7.
Special
Zones
Specialized tourism zones aim to

promote agriculture tourism to provide
employment & economic stability in
rural communities. An investment is
invited to farm vacation, farm stays,
camping sites themed special events
and festivals, agro-shopping, culinary
tourism, bed & breakfast, boating,
health (naturopathy & ayurvedic)
tourism. This type of programmes
provides an opportunity for urban
people to get back to the roots.
8.
Investment Promotion
Agro-Tourism
Investment
The state government is already

conducting regular promotion events
like Global Investors Meet (GIM). BioTechnology Summit to promote
investment into state. Along with these,
it is proposed in the policy to conduct
Multiple Global Agribusiness Investors
Meet (GABIM), Road Shows, B2B
Meetings etc.
108
5.
private sector.
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In order to woo investment from nook

& corner of the world, the policy has
contemplated the state government
entering MoUs with regarding national
and international R & D and financial
institutes
9.
Land for Agro-based Industries and

Agri-Infrastructure Projects
Potential investors can locate the spots

from the Land Bank (list of
government lands available for
investment declared by the state
government)
for
infrastructural
facilities either in earmarked industrial
parks, SEZs or Industrial Estates
It is also proposed to involve land
owners in the project in terms of equity
structure/revenue
sharing/business
partnerships
Agro-based industries and agriinfrastructure entities are entitled to
hold private agricultural land on longterm lease for agribusiness activities
Proposed in the policy to make
available government lands and
agriculture farms on lease basis at
concessional rates
The major incentives available for large, MSME, large and Mega Agro-based industries and
Agri-Infrastructure are:
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Through the Karnataka Industrial Policy 2009-14, government has put efforts to concentrate the
entire state for industrial development. Moreover, Dr.D.M.Nanjundappa (an eminent economist)
Committee Report on Regional Imbalances has also suggested to extend some concession and
privileges to industrially backward districts and taluks in the state. In this direction the
government of Karnataka is putting its efforts towards the development of the whole state
irrespective of regions like old Mysore, Hyderabad-Karnatka, Bombay-Karnataka, Malnad etc.
THE KARNATAKA INDUSTRIAL POLICY 2009-2014
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1. Stamp duty exemption to an extent of 50% and concessional registration charges is

available for lease deeds, lease-cum-sale and absolute sale deeds executed with KIADB,
KSSIDC, KSIIDC, Industrial Estates.
2. 100% exemption from payment of Entry Tax on Plant & Machinery and Capital goods
for an initial period of three is available.
3. One time capital subsidy up to 50% of the cost of Effluent Treatment Plants (ETP)
subject to ceiling of 100 for MSME, Large & Mega agro-based industrial unit & Rs.500
lakhs for common Effluent Treatment Plant established as part of agri-infrastructure
facility.
CRITICAL ANALYSIS OF IADP-2011
FDI in Indian agriculture sector and the latest developments (highlighted on consolidated
FDI Policy of GOI w.e.f. April 1st, 2011, circular 01 of 2011)
Department of Industrial Policy and Promotion (DIPP) working under the Ministry of
Finance, GOI has issued the circular 01 of 2010with regard to the policy on FDI. With the new
guidelines, FDI is permitted up to 100% through the Automatic Approval route covering
horticulture, floriculture \, development of seeds, animal husbandry, pisciculture, aquaculture,
cultivation of vegetables, mushroom services related to agro & allied sectors. Surprisingly, no
FDI/NRI/OCB was allowed in the FDI Policy-2004 other than Tea sector. FDI was permitted up
to 100% in Tea plantations with prior government approval. Further, it requires compulsory
divestment of 26% equity in favour of the Indian partner or Indian public with a maximum
period of Five years. With the liberalized attitude of GOI, the sector is able to attract FDI.
In India, more than four-fifth of farmers relay on farm saved seeds leading to a low seed
replacement rate. Therefore, Government of India has addressing this issue. Indian seed
programme including ICAR, Agri-Universities , state governments, farmers, plant breeds, cooperatives
and
private
sector
(Source:
Economic
Survey
2010-11,
p-95
www.indianbudget.nic.in)
But, the Department of Industrial Planning and Promotion through its press note, has
incorporated major changes to the consolidated FDI Policy. FDI has now been permitted in the
development and production of seeds and planting material without the stipulation of having to
do so under controlled conditions.
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In order to bring a green revolution, Government of India on 31st March, 2011 has
introduced New FDI Policy which aims at inviting FDI in the sectors which were closed for
foreign investment earlier. As per the circular, the investing company shall carryout the
cultivation of floriculture, horticulture, vegetables and mushrooms under controlled conditions,
wherein rainfall, temperature, solar radiation, air humidity are controlled artificially.
FDI IN AGRICULTURE SERVICES: BOONE OR BANE?
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The sector wise FDI inflows for agriculture services from April 2000 to May 2012 is
Rs.7015.01 crores, this is 0.84% to total FDI inflows (Rs.791854.12 crores) for the said period.
(www.dipp.nic.in)
TABLE: 01
PUBLIC AND PRIVATE INVESTMENT IN AGRICULTURE AND ALLIED SECTORS
IN TOTAL GDP AT MARKET PRICES (2004-05 PRICES)
(RS.IN CRORES)
Investment
Share (%) in Total
Year
GDP at Market
Public
Private
Total
Public
Private
Total
2004-05
16182
62666
78848
3239224
0.5
1.9
2.4
2005-06
19909
73212
93121
3540559
0.6
2.1
2.6
2006-07
22978
71422
94400
3874632
0.6
1.8
2.4
2007-08
23040
86966
110006
4247918
0.5
2.0
2.6
2008-09
24452
114145
138597
4465360
0.5
2.6
3.1
Source: Central Statistical Organization, New Delhi (accessed on 15-7-2012)
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From table 01 It is the share of private sector in agriculture and allied sectors in total
GDP is considerable. Nearly 80% of investment in the agri & allied activities is made by the
private sector. The share of agriculture and allied sectors in total Gross capital Formation (GCF)
in % is 10.2% in 2008-09 whereas the share of public investment is 5.9%.(Table :02)
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TABLE: 01
GROSS CAPITAL FORMATION IN AGRICULTURE & ALLIED SECTOR (AT
2004-05 PRICES) (RS. IN CRORES)
GCF in Agriculture &
Allied Sector
GCF of Economy
Public
Private Total
Public
2004
-05
16182
62666
78848
2005
-06
19909
73212
2006
-07
22978
2007
-08
2008
-09
Year
Share of Agriculture &

Allied Sector in Total (%)
(by industry of use)

Private
Total
Public
Private
Total
240755 770168
1010923
6.7
8.1
7.8
93121
278703 894368
1173071
7.1
8.2
7.9
71422
94400
324342 1037543
1361885
7.1
6.9
6.9
23040
86966
11000
6
379495 1189514
1569009
6.1
7.3
7.0
24452
114145
13859
7
414122 1116851
1530973
5.9
10.2
9.1
A collective from both the stakeholders i.e. public and private in the forward and
backward linkages is the need of the hour. A private investment (either FDI or NRI or domestic
private) in agriculture will not only affect on agriculture but also on allied and related industries
sectors. FDI inflows to agriculture services also facilitated growth of other related areas (may be
in the procurement & marketing of agri and allied products) like roads, water supply, irrigation.
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If we observe the public sector outlays/expenditure, the government (total of center,

states and UTs except Maharastra & Uttarkhand), it has increased Rs.37546 crores, Rs.58933
crores, and Rs.136381 crores respectively during 9th Plan, 10th Plan, and 11th Plan for agriculture
and allied activities. The government has also increased Rs.15879 crores, Rs.18460 crores,
Rs.26222 crores, Rs.32490 crores, Rs.76603 crores and Rs.52980 crores respectively for the
years 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 and 2009-10 towards Fertilizer subsidy for
agriculture sector. Even after putting all these efforts for the self-sufficiency of the Indian
farmers, but, due to loopholes in the policies on agriculture and improper utilization of the funds
allocated, the status of the Indian farmers is not improved as the policy makers have expected.
Source: Central Statistical Organization, New Delhi (accessed on 15-7-2012)
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AGRICULTURAL RESEARCH AND INNOVATION IN INDIA: A NEW AVENUE FOR

PRIVATE INVESTMENT
Diversion of investment for Research and Innovation Management change are the two
crucial issues in the agricultural arena. In fact, The Government patronaged research institutes
and centers are striving to bring new and innovated Genetically Modified (GM) seeds into the
field and these are extremely important to farmers.
Research and Innovative activities are the part of business organisation and these are
never ending activities. In the saga of Research and Innovation, we should not forget the role of
investment by private players.
The question to be discussed here is whether the IADP is giving solution to the following
questions are not?
1. Adequate and appropriate storage and distribution system.
2. Technical support for the sector.
3. Consistence with supply and quality.
4. Superior quality of seeds and adequate supply of such seeds.
5. The least post harvest losses.
6. Proper handling of agriculture and allied sectors.
7. Good hygienic conditions.
8. Good slaughter houses.
9. Adequacy of exportable agri-products.
To realize the stated issues, the following proposals have been made in the policy:
1. DEVELOPMENT OF AGRO-INFRASTRUCTURE
Proposed to create agro-corridor, agri-SEZs, agri-parks, common processing
centers, auction houses.
113
Thus, to give proper solution to the above agriculture and allied sector needs an abundant fund,
technology, markets initiations of the Government and policy measures. In order to get good
value addition, the said sectors need to be overhauled with new technology.
10. Good post harvest infrastructure.
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Creation of new fishing harbors and fish landing facilities with adequate forward
and backward linkages.
Upgrade, modernize and augmentation of existing industrial infrastructure and
environmental infrastructure.
2. RESEARCH, SKILL DEVELOPMENT AND EMPLOYMENT GENERATION:
Promoting excellence in basic, strategic and anticipatory research in crop science,
horticulture, veterinary science, animal science, dairy science, food processing, food
packing technology, food engineering,. It is also proposed to develop educational and
research institutes and training centres, skill development centers for capacity building
for sustained agricultural growth.
Arranging regular technology exchange programmes
Arranging regular technology programmes
Training programmes for target groups like farmers, farmer societies, Self Help
Groups, women development groups
3. AGRO-EXPORTS: In order to boost agro-exports, creation of new markets and new
product lines and develop alternate marketing channels, encouraging high realization and
value added exports meeting, meeting European Union and other international standards.
4. KARNATAKA AGRI BUSINESS DEVELOPMENT CORPORATION (KABDC):
Through the establishment of KABDC, it is expected to act this agency as a single
window for all the clearances. This corporation will also conduct the investors meets,
road shows etc.
5. DEVELOPMENT OF AGRI-INPUT SECTOR: For sustained agricultural growth, it is
planned to develop agri-input sector including the following:
Pest management for animal husbandry

Food processing and manufacturing equipments
Development of Bio-compost plants using town domestic waste
Agro and rural financing
114
Seed certification centers
Setting up of major seed production, processing and storage centers
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6. KNOWLEDGE SUPPORT CELL: The knowledge support cell would cover

university, farmer interaction, corporate knowledge, knowledge dissemination,
technologies, weather updates, soil and water testing services, promotion of information
technology in agriculture, guidance to technical cultivation, farmer field schools, creating
awareness of improved agricultural technologies among the farmers etc.,
POLICY RECOMMENDATIONS
The following recommendations have been made for further improvement of the
policy and enable to make more investment from the private sectors.
1. In order to invite private investment to this sector, the infrastructure need to be well
prepared by the government fund initially.
2. World class supply chain need to be developed initially
3. An atmosphere of farm to fork has to be developed in a drastic manner
4. Promotional activities have to be developed to the need of the sector
5. Government has to take the risk of conducting the investors meet and road shows
regularly.
6. In order to take up contract forming meaningfully and to uplift the economic
conditions of the farmers the existing APMC Act need to be amended by taking the
interest of stakeholders into account.
9. The government lands and agriculture farms of the government should be available to
the stakeholders on lease basis at concessional rates to takeup the agricultural
activities in a mass manner.
10. The environment should be prepared in such a way that the Potential investors can
locate the spots from the Land Bank (list of government lands available for
investment declared by the state government) for infrastructural facilities either in
earmarked industrial parks, SEZs or Industrial Estates very easily.
115
8. In order to woo investment from nook & corner of the world, the policy has
contemplated the state government entering MoUs with regarding national and
international R & D and financial institutes
7. Research and Development centres and human skill development centres in order to
protect the interest of the farmers need to be established at grass root level.
IRJC
Karnataka has taken a lead initiative in developing sustainable agribusiness enabled

through an IADP-covering agriculture and allied sectors (like horticulture, fisheries, animal
husbandry, sericulture and food processing) both in infrastructure and industrial segments on an
end to end concept. Through this policy, the Government of Karnataka intends to offer immense
opportunities for high growth in agriculture and allied sector. It has also been planned to give
more attention to the priority areas such as improving production and productivity, reducing
production cost, reduction of wastages, increasing value addition, use of high-tech agricultural
technologies, Genetically Modified (GM) varieties, micro-irrigation, organic farming, integrated
pest management, protected cultivation, green house technology, modernization of slaughter
houses, modern fish handling factices etc. The agribusiness policy aims to create an institutional
arrangement for resolving the said issues. The prime aim of the policy is to facilitate flow of
investment, skills, technologies, and modern management practices. The policy is to facilitate
state of the-art-technology, know-how, and avenues for interventional marketing of the produce
apart from investments by private sector in developing agri-infrastructure and agro-based
industries in Karnataka.
REFERENCES
1. Pray, Carl E and Latha Nagarajan (2012), International Food Policy Research Institutes
study on Innovation and Research by Private Agribusiness in India, Paper No-01181,
pp. 1-33.
2. Sharma, Vijay Paul (2008), Indias Agrarian Crisis and Corporate led Contract Farming:
Socio-Economic Implications for Smallholder Products, International Food &
Agribusiness Management Review, Vol.11, Issue 4, pp. 25-46.
3. Joyachin, Ashok Gulati, Peter Hazell,Mark W. Rosegarant & Miarie Ruel (2005), Indian
Agriculture and Rural Development, International Food Policy Research Institute,
Washington, pp. 1-6.
4. www.dipp.gov.in
7. www.indiabudget.com
116
6. www.karnatakaagriculture
5. www.indianagriculture.com

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IRJC

Asia Pacific Journal of Marketing & Management Review

THE ENVIRONMENT FOR AGRICULTURAL AND AGRIBUSINESS

KEYWORDS: agri, agro, agriculture, FDI, investment.

NEED OF THE STUDY

No FDI/NRI investment permitted other than tea sector

Reserved until 1986.

Since 2005, 100% FDI

Reserved for smallscale and cooperative

small- Reserved until 1998.

FDI still prohibited in retail

1. Substantial increase in investment is expected to improve the agricultural value chain

The Govt. of Karnataka has developed Integrated Agribusiness Development Policy

AN OVERVIEW OF INTEGRATED AGRIBUSINESS DEVELOPMENT POLICY

3. Modernisation of existing agri-infrastructure in the state: Policy aims to bring

Agri-Infrastructure: Include both

Proposed to attract investments both in

and transparent process

specific value addition parks for

Karnataka has competitive advantage

Amendment to APMC Act to take up

Proposed to take up contract forming by

Special Purpose vehicle (SPV) :

Food Processing Center corridor

With the aim of enhancing revenues to

An ample opportunities created in the

Specialized tourism zones aim to

The state government is already

In order to woo investment from nook

Land for Agro-based Industries and

Potential investors can locate the spots

THE KARNATAKA INDUSTRIAL POLICY 2009-2014

1. Stamp duty exemption to an extent of 50% and concessional registration charges is

FDI IN AGRICULTURE SERVICES: BOONE OR BANE?

Share (%) in Total

Source: Central Statistical Organization, New Delhi (accessed on 15-7-2012)

Share of Agriculture &

(by industry of use)

If we observe the public sector outlays/expenditure, the government (total of center,

Source: Central Statistical Organization, New Delhi (accessed on 15-7-2012)

AGRICULTURAL RESEARCH AND INNOVATION IN INDIA: A NEW AVENUE FOR

10. Good post harvest infrastructure.

Pest management for animal husbandry

Seed certification centers

Setting up of major seed production, processing and storage centers

6. KNOWLEDGE SUPPORT CELL: The knowledge support cell would cover

Karnataka has taken a lead initiative in developing sustainable agribusiness enabled

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