Thinking of investing in India? There is one sector you may have overlooked: agriculture.
With its growing population, rising income levels and growing middle class, India has attracted the usual investment suspects of retail, aviation and FMCGs. But although it may not be glamorous and it may be politically complicated, India’s agricultural sector is set to expand fast....
Govind Hariharan, executive director of the India, China, America Institute, tells beyondbrics that investment is the first step for the Indian food industry, before the report’s other suggestions can be implemented.
“The appropriate infrastructure is really critical and that’s where the foreign investments will show up and have the greatest returns”, he said. “We have so much wastage in food products and all of those have to be removed before it becomes a really viable investment proposition. [The report] is jumping two steps ahead without having a platform to jump from.”
The real opportunity will arise when the Indian market is integrated with its eastern neighbours. If the proposed highway from India to China is built through Myanmar, and if India’s ports are linked to southeast Asian countries, supply chain infrastructure within India will be needed to ensure the new routes translate into new trade.
The McKinsey report may be bullish but Hariharan points out that agriculture in India is far from a simple investment: “Generally the politics involved with agriculture mean it isn’t the easiest thing to get into, for foreign companies in particular.”
In a pre-election year, it won’t be easy to open the agricultural sector to foreign investment. But if productivity, accessibility and quality are to improve, it’s a crucial step.
Economics professor Govind Hariharan was named executive director of the India China America Institute, which is housed in Kennesaw State’s Coles College of Business, in spring 2011. Previously, Hariharan served as chair of the Department of Economics, Finance and Quantitative Analysis at the Coles College of Business. He is also associate director of the college’s Econometric Center.