Review not to plough the farms

NEW DELHI: Following strong opposition from Left parties and various sections of the government including the agriculture ministry towards further opening up foreign direct investment (FDI) in the farm sector, the department of industrial policy and promotion (Dipp) has decided to keep the segment out of the FDI review being carried out currently.

Sources said the Dipp had, in fact, decided against making a changes in the FDI policy for agriculture. “We had a inter-ministerial meet, where most opposed any policy change in agriculture. As this is a very sensitive sector, we do not want to tinker with it at the moment,” an official said.

At present, FDI up to 100% is permitted under the automatic route in select areas such as floriculture, horticulture, development of seeds, animal husbandry, aquaculture, services related to agriculture and allied sectors, and cultivation of vegetables and mushrooms under controlled conditions.

The Dipp was looking at the possibility of liberalising investment norms for the agri industry by allowing access to foreign funds, making it easier for foreign investors to diversify into new projects by exempting the sector from the stringent requirements of press note 1 and expanding further the list of activities where FDI is allowed under direct route, sources said.

Lack of infrastructure in the farm sector, especially for cold storage and transportation, had prompted the DIPP to contemplate steps to make the sector more attractive for foreign investors.

However, after subsequent rounds of discussions with various stakeholders, the department changed its mind. “While everybody agreed that there was a need to step up investment in agriculture, it was decided that this was not the right time to liberalise FDI norms further,” the official said.

As per data collected by the Dipp, there are just 1,500 refrigerated trucks in the country while there is a requirement for 15 lakh. Although the country is the largest producer of milk and produces huge quantities of fruit and vegetables, much of it gets spoilt in transit due to lack of adequate infrastructure, sources added. Enhanced flow of FDI would help in boosting farm-related infrastructure, it is felt.