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Performance of agro based industries in India

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National Journal of Advanced Research

National Journal of Advanced Research

Online ISSN: 2455-216X; Impact Factor: RJIF 5.12
www.allnationaljournal.com
Volume 2; Issue 6; November 2016; Page No. 25-28

Performance of agro based industries in India

1
Dr. C Paramasivan, 2 R Pasupathi
1
Assistant Pofessor PG & Research Department of Commerce Periyar E.V.R. College (Autonomous), Tiruchirappalli, Tamil
Nadu, India
2
Ph.D Research Scholar PG & Research Department of Commerce Periyar E.V.R. College (Autonomous), Tiruchirappalli, Tamil
Nadu, India

Abstract
Industrial development not only depens on innovation and capital outflow in a country, but also it needs availability of raw
materials and adequate physical infrastructural facilities. Agriculture is one of the major raw material providing sector for major
industries like paper, sugar, textile, fertilizers, chemical, edible oil, etc., Agro-based industries can play an important role to a
large extent in solving the problem of poverty, unemployment and inequality in India and can significantly contribute to the
overall development of the economy by efficiently utilizing the local raw materials which consequently may result in increase of
gainful employment opportunities to poor people mainly landless, marginal and small farmers. This paper discuss in the
performance of agro based industries in India.

Keywords: Agro based industry, Agriculture, Small farmers, Labour intensive, Capital saving

1. Introduction productivity come under this type Ex: Agriculture

Agriculture and industry are integral components of the implements, Seed industries, Pumbset, Fertilizer and
development process due to their mutual relationship as pesticide unitsetc,
agriculture provides inputs to the industry and output of the 4. Agro service centre
industry is used in agriculture to expand production. There are Agro service centre are workshops and service centre
many industries which are based on agricultural production. which are engaged in repairing and servicing of pump
Agro-based industries are depend on agriculture for their raw- sets, diesel engines, tractors and all type of farm
material and other basic inputs. This inter-dependence must be equipment.
oriented to suit the need of our country and State. Stabilization
and growth of agricultural production results in rapid 1.2 Review of Literature
advancement in output and employment in agro-industries. Vikram Puri (2012) [13] expalins that Agribusiness boom is
Further, the cumulative effect of agricultural growth and underway in India, and it needs big talent to drive its growth.
growth of agro-industries creates greater opportunities for Growth in agricultural productivity will build incomes and
industrial growth as well as integration of the different sectors assets, and although somewhat cyclical, at the macro level,
of the economy. Agro-based industries may be classified into agriculture in India will inherently be recession proof over the
two categories namely food processing industries and non- long term. The greatest achievement for India will come from
food processing industries. Food processing industries mainly sustained self-sufficiency in food.
deal with the preservation of perishable products and Vasant Gandhi (2001) [12] delivered that Agro industry have
utilisation of by-products for other purposes. These types of been given significant priority in economic development in
industries include the processing of wheat, rice, maize, barley, India. The agro industrial sector in India contributes a large
pulses, meat, fruits, vegetables, etc. share of overall employment in industry as well as value
addition and income generation. Its continued role in
1.1 Agro Based Industries promoting development, and reducing poverty, will depend on
1. Agro-produce processing units its capacity to contribute to small farm income and rural
They merely process the raw material so that it can be employment, particularly among the landless poor.
preserved and transported at cheaper cost. No new Managerially, one of the major challenges lies in organizing
product is manufactured. Ex: Rice mills, Dal mills etc, sustained production and procurement from large numbers of
2. Agro-produce manufacturing units small farmers.
Manufacture entirely new products. Finishing goods will Pawan Kumar Dhiman and Amita Rani (2011) [8] discuseed
entirely different from its original raw material. Ex: sugar Agro based industry is regarded as the sunrise sector of the
factories, Bakery, Solvent extraction units, Textile mills Indian economy in view of its large potential for growth and
etc, likely socio economic impact specifically on employment and
3. Agro-inputsmanufacturing units income generation. Some estimates suggest that in developed
Industrial units which produce goods either for countries, approximately 14 per cent of the total work force is
mechanization of agriculture or for increasing engaged in agro-processing sector directly or indirectly.

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National Journal of Advanced Research

However, in India, only about 3 per cent of the work force activity of a human being. Agriculture sector in India
finds employment in this sector revealing its underdeveloped contributes nearly half of the national income, providing jobs
state and vast untapped potential for employment. to three fourth of the total population. In short agriculture
Karand Mishra (2004) [6] has stressed in his book “Agro plays a significant role in the economic development process
industries & economic development” that setting industries of a country and agriculture continues to be the most
which make use the producers of agriculture directly or predominant sector of the Tamilnadu economy. Agriculture
indirectly are considered more desirable in the context of the productivity has been an important issue as the population
economic development of the country. Such a development continues to grow.
has a two way effect i.e. Agriculture helps agro-related Rajiv Khosla (2013) [10] suggested agro based industries are
industries to make use of the raw materials directly supplied seen as an important link between agriculture and industry
by this sector and it facilitates the growth of those types of which can solve inherent problems prevailing in the Indian
industries which produce several inputs like fertilizer, agriculture. But, to promote agro industries in an imprecise
pesticides and agricultural implements that help to promote way to solve agricultural problem will not offer any solution.
the productivity and expansion of agriculture. In case of number of agro based industries relative labour,
Ganesh-Kumar (2011) [5] concluded that agro-processing capital and efficiency clearly and consistently indicates bright
sector in India is small relative to the primary agriculture prospects and a good scope of their development. In case of
sector; its role as a driver in agricultural development and many other agro based industries evidence is equally clear
employment is therefore not critical at present. Find that about bleak prospects of further development. On the basis of
indirect effects on agro-processing from India’s policy reforms these evidences, we can say with some confidence that the
in other sectors are more important than reforms in agro- following agro based industries have a very good scope of
processing itself. This is especially true of policy reforms in development in India.
primary agriculture, which can impact agro-processing Prabeena Ambidattu (2015) [9] explains India is one of the
through both input supply and aggregate demand. Moreover largest producers of food and it is also the largest producer of
argue that an economy-wide perspective when targeting milk, sugar cane and tea. Second largest producer of rice,
reform or development of the agro-processing sector in India. fruits, wheat and vegetables. In India 70% of the population
Lakshmi Kantha Reddy and Rathnakumari (2014) [9] explains depends on agriculture and agro based industries. The
that agriculture has been a way of life and continues to be development of agro processing industries implies the
single most important livelihood of the masses. Agricultural development of agriculture on one hand and the entire set of
policy focus in India across decades has been on self- industries, linkages, and investments that cater to the demands
sufficiency and self-reliance in food grains production. Agro of the masses with improving incomes and environment on the
based industries in the development of India is widely other. It creates space for improving farm industry linkages
recognized and needs no emphasis. They can provide vast along with great export potential.
employment opportunitiesat comparatively low investment.
Randeni (2011) [11] suggestedthat technology can make a 1.3 Agro based Industries in India
considerable contribution to develop agro -based industries as Agro industry is an enterprise that processes raw materials,
far as possible. In this point of view, a deeper investigation including ground and tree crops as well as livestock. The
was made to identify weather they have been provided more degree of processing can vary tremendously, ranging from the
technological facilities as they expected. In this review to cleaning and grading of apples to the milling of rice, to the
some extent it was noted that they are having lack of expected cooking, mixing, and chemical alteration that create a
technological facilities as well as technological know –how. texturized vegetable food agro industries can be roughly
The agro-based industries can be established and developed categorized according to the degree the raw material is
very well in NCP enabling to cater the industrial purposes of transformed. In general, capital investment, technological
the country. complexity and management requirements increase in
Arul Kumar and Manimannan (2014) [2] found that Agriculture proportion with the degree of transformation.
still forms the life line of our Indian economy and vital

Table 1: Agro based Industries in India

S. No Description Industries Productive Capital* Workers
1 Food products 35346 21979802 1232679
2 Textiles 18645 24860635 1267670
3 Rubber and plastic products 13147 10079179 466790
4 Tobacco products 3294 1310788 425799
5 Beverages 2103 3881305 121346
6 Paper and paper products 6810 5415903 193026
7 Cotton ginning, cleaning and bailing, Seed processing for propagation 3301 1474036 73096
8 Wood and products of wood and cork, except furniture 4269 891952 60034
Total 86915 69893600 3840440
*Capitalmeasured as Rs. in lakh
Source: Annual Survey Industries 2013-14.

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National Journal of Advanced Research

Table No 1 shows that, as per the annual survey of industries based industries will help to diversification of rural economy it
2013-14, there are 86915 agro based industries with 3840440 will help to reduce extreme dependence only on agriculture
workers and its productive capacity amounted to Rs.69893600 which makes for in stability of rural economy. Agro based
lakhs. industries would help to solve the unemployment and under
Agro based industries can provide increasing employment employment especially among landless agricultural labor and
opportunities to the landless poor’s and rural peoples. Agro tribal population.

Table 2: Agro based Manufacturing Industries Production Growth Rate in India

S. No Industry Group 2009-10 2010-11 2011-12 2012-13 2013-14
1 Food products & beverages 133.5 142.9 164.8 169.5 167.7
2 Tobacco products 102.0 104.1 109.7 109.2 110.2
3 Textiles 127.4 135.9 134.0 142.0 148.3
Wood & products of wood and cork, except
4 160.1 156.5 159.2 147.9 144.6
furniture, manufacturing of articles of straw
5 Paper & paper products 121.1 131.4 138.0 138.7 138.6
6 Rubber and plastic products 167.4 185.2 184.6 185.0 181.1
Total 811.5 856.0 890.3 892.3 890.5
*Base 2004-05=100.
Source: Central statistic office (Economic survey 2014-15).

Table No 2 reveals that agro based manufacturing industries industries have got concentrated in urban areas. Agro-based
production growth rate in the year 2009-10 was 811.5 and it industries would thus be a step in the direction of reducing
has been increased to 890.5 in the year 2013-14. Agro based extreme inequalities of income and wealth both in rural and
industries has been consistently growing in India during the direction of establishing socialist pattern of society.
year 2009-10 to 2013-14. It ensure to rural people for employment and steady income.
Agro-based industries by providing employment and income Agro based industry is the most important factor of poverty
to rural masses would help to reduce extreme inequalities of alleviation and developed the socio economic rural people.
income that persist today in Indian economy because

Table 3: Exported Agro Based Products

2014-2015 2015-2016 (Prov)
S. No Commodity
Quantity Value % Quantity Value %
1 Rice (Basmati) 3698.93 4516.28 23.13 2388.82 2172.52 23.01
2 Rice (except Basmati) 8278.23 3336.84 17.08 3824.16 1398.39 14.81
3 Spices 926.02 2430.35 12.44 491.29 1472.71 15.60
4 Cashew 134.57 909.26 4.65 59.08 452.58 4.79
5 Sugar 1955.19 871.41 4.46 1639.48 611.81 6.48
6 Other Cereals 3514.35 869.11 4.45 645.48 162.33 1.74
7 Wheat 2924.05 828.75 4.24 415.92 102.5 1.08
8 Coffee 221.04 814.02 4.18 147.07 460.25 4.87
9 Fresh Vegetables 2061.00 763.24 3.90 923.63 388.05 4.11
10 Groundnut 708.39 760.37 3.89 219.74 278.07 2.94
11 Tea 215.41 681.79 3.49 137.07 414.98 4.39
12 Processed Fruits & Juices - 592.26 3.03 - 330.38 3.49
13 Fresh Fruits 486.94 516.26 2.64 231.06 244.56 2.59
14 Cereal Preparations 305.43 496.41 2.54 188.15 298.47 3.16
15 Processed Vegetables - 281.75 1.44 - 145.82 1.54
16 Pulses 222.14 199.86 1.02 130.44 122.51 1.29
17 Other Oil Seeds 247.54 185.03 0.94 116.89 86.13 0.93
18 Milled Products 419.86 168.76 0.88 259.99 101.01 1.06
19 Cocoa Products 20.88 138.87 0.74 19.55 108.34 1.15
20 Vegetable Oils 42.05 94.56 0.48 15.23 46.35 0.49
21 Fruits &Vegetable Seeds 12.05 69.96 0.38 3.61 42.48 0.48
Total 26394.88 19525.14 100 11857.92 9440.33 100
* Quantity measured as Thousand Million Tonnes and Value measured as Millions in $
Source: Ministry of Commerce & Industry.

In the year 2014-15, export of agro based industries quantity $ 9440.33million, of which basmati rice (23.01%) is the major
amounted to 26394.88thousand million tones with the value of agro based export products.
$ 19525.14million, of which basmati rice (23.33%) is the
major agro based export products. 4. Conclusion
In the year 2015-16, export of agro based industries quantity The impact of agro-based industries was significant on the
amounted to 11857.92thousand million tones with the value of income levels of all categories of the rural population. The

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National Journal of Advanced Research

increase in incomes was more spectacular in the households of

agricultural workers employed in agro-based industrial units.
While the farmer category was benefited by the agro-based
industries indirectly through higher rates of wages and ensured
employment in the farm sector, the latter was benefited by the
employment in agro-based industrial units.
Agro based industries in India is one of the basic and
backbone of Indian economy which provide employment,
income generation, industrial inputs and outputs, regional
growth and associated with all kind of walks of human beings.
Growth of agricultural sector became a growth of socio-
economic development of the country. Therefore, it is
concluded that, there is a vast scope in the export of agro
based products in future with huge volume of foreign
exchange. There is a need of specialized and effective steps to
be taken for promoting the agro based export in future.

5. Reference
1. Annual survey industries report. 2013-14.
2. Arulkumar, Manimannan. spartial pattern of agriculture
productivity of crops in cauvery delta zone of Tamilnadu.
IOSR journal of agriculture and veterinary science. 2014;
7(11):1-7.
3. Central statistics office (Economic survey). 2014-15.
4. Export and Import Report, Ministry of Commerce and
Industry, 2015.
5. Ganesh Kumar. Reforms in Indian agro-processing and
agriculture sectors in the context of unilateral and
multilateral trade agreements. 8th annual conference on
global economic analysis, 2011, 1-35.
6. Karg cand mishras N. agro industries and economic
development, deep & deep publications pvt. Ltd. 2004.
7. Lakshmi Kanthareddy, Rathna Kumara. Performance of
agro – based industries in india: a critical analysis. IOSR
journal of economics and finance. 2014; 2(4):15-25.
8. Pawan Kumar Dhiman, Amitta Ram. Problems and
prospects of small scale agro based industries an analysis
of Patiala district. International journal of
multidisciplinary research. 2011; 1(4):129-142.
9. Prabeena Ambidattu. An analysis of performance of agro
based industries in kerala with special reference to cashew
nut. Indian journal of economics and development. 2015;
3(12):1-5.
10. Rajiov Khosla. Inter industry differences in efficiency of
agro processing industries in Indian states. International
journal of arts and commerce. 2013; 1(3):1-21.
11. Randeni. The potential of developing agro based
industries in srilanka with special reference to north
central province. International conference management,
economics and social sciences. 2011, 605-608.
12. Vasant Gandhi. Agro industry for rural and small farmer
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