FDI in Agriculture-bless or bane?

Dr.T.P.Sethumadhavan

In a historical move Government of India on 31^st March 2011 brought in a revised policy for foreign direct investment (FDI) in the country. As per the new policy, the norms are extremely relaxed for Foreign Investment, which is expected to create a huge boost in the country’s economy.

Major sectors of FDI include Seeds, Plantation, Horticulture, Cultivation of vegetables, Animal husbandry and Fisheries. 100 percent FDI has been allowed in the above sectors including dog breeding. According to the circular by the Department of Industrial Policy and Promotion "Consolidated FDI Policy -- Circular 1 of 2011" while dealing with genetically modified seeds or planting material the company is supposed to comply with safety requirements in accordance with laws enacted under the Environment (Protection) Act on the genetically modified organisms; any import of genetically modified materials, if required, shall be subject to the conditions laid down vide Notifications issued under Foreign Trade (Development and Regulation) Act, 1992; the company shall comply with any other law, regulation or policy governing genetically modified material in force from time to time; undertaking of business activities involving the use of genetically engineered cells and material shall be subject to the receipt of approvals from Genetic Engineering Approval Committee (GEAC) and Review Committee on Genetic Manipulation (RCGM); the Import of materials shall be in accordance with National Seeds Policy.

Circular emphasizes the term “under controlled conditions’’ which covers Cultivation under controlled conditions’ for the categories of floriculture, horticulture, cultivation of vegetables and mushrooms wherein rainfall, temperature, solar radiation, air humidity and culture medium are controlled artificially. Control in these parameters can be made through protected cultivation under green houses, net houses, poly houses or any other improved infrastructure facilities where microclimatic conditions are regulated.

Within Animal husbandry, the term under controlled conditions envisage rearing of animals under intensive farming systems with stall-feeding. Intensive farming system will require climate systems (ventilation, temperature/humidity management), health care and nutrition, herd registering/pedigree recording, use of machinery, waste management systems. Poultry breeding farms and hatcheries where microclimate is controlled through advanced technologies like incubators, ventilation systems etc will also come under this circular.

Pisciculture and aquaculture include aquariums and hatcheries where eggs are artificially fertilized and fry are hatched and incubated in an enclosed environment with artificial climate control.

As a part of the new policy, Government of India has brought significant hopes to oversee firms by permitting equity against imported capital goods and machinery and relaxing the norms regarding convertible instruments and downstream investments. It is expected that the farm sectors of the country would now see huge investments by foreign firms. Indian consumers might see better branding, packaging and glamour in the markets of agricultural sector with 100% foreign investment, but this may affect common consumers through risk of price rise and acquisition or closing down of small scale units.