Profile:
Agriculture is the foundation of Indian economy on which almost 70% of the population depends. Having achieved near self sufficiency in primary agriculture (grains, sugar cane, fruits, vegetables and milk etc.) the country must now focus attention on secondary agriculture. The secondary agriculture provides value addition to agricultural products, creating facilities for primary processing and stress management in agriculture and adds value to the basic agro commodities to allow farmers to get better returns from their harvest. It also creates a new job in the rural sector to grow rural economy which is entirely based on agriculture.
Secondary agriculture can reverse this trend and add two to three-fold value to primary agriculture. Examples of secondary agriculture are vitamins from grains, oil from rice bran, starched sugar from corn, milk and protein from soybean, industrial chemicals and bio-fuel from sugarcane and ligno-cellulosic biomass, fiber board from rice straw, high value animal by products, in addition to medicinal plants and herbal products not yet fully capitalized in India.
Major constraints in building agro-industries in India include:
• Lack of coordination between the R&D institutes (ICAR, CSIR and DBT) and the agro-industries;
• Restricted flow of agricultural produce from one state to another;
• Poor market linkages for processed products for getting the price advantage;
• Lack of sufficient credit availability, administrative encouragement, policy support, etc.;
• Almost non-existent agri-venture capital in the country;
• Most important, the poor infrastructure - essentially, the roads and transport systems to provide connectivity with urban markets, and the lack of power for cold storage systems and processing of perishable products.
Government Initiatives
The Technical Advisory Committee on Secondary Agriculture (TACSA) was constituted by the Planning Commission to address these issues and find workable solutions that can serve as catalysts to fuel private sector activities in this important area. Such a stimulus may help transform the Indian agriculture economy from the grass roots level, so that it can keep up at least with the average growth of the GDP. Secondary agriculture is highly complex, as it involves old as well as new technologies, capital investments, improvements in rural infrastructure, marketing and some critical changes in Government regulations.
If successfully implemented, however, this activity can add hundreds of billions of dollars to the Indian economy and create millions of new jobs within the next decade, making a fundamental change in rural life, which has so far not occurred in any significant way over the last 60 years.
TACSA is proposing that a sum of $2 billion be invested by the Government to jump-start the secondary agriculture activities as follows:
• This investment, Secondary Agriculture Improvement Fund (SAIF), is to be treated as venture capital with expected returns in a defined time;
• An investment of $200 Million in developing the bioprocessing infrastructure, including building an integrated Bioprocessing Technology institute (IBTI);
• An investment of $100 Million coupled with additional private Angel Funds of $100 Million for early stage concept development and proof of concept generation in specific promising bio processing technologies;
• An investment of $700 Million to be coupled with private venture funds for small company development (minimum of 1:1 matching and up to 1:4 matching of SAIF Private Funds).
• An investment of $1 Billion for project financing to be coupled with private funds of $2-3 Billion.