This is a best prospect industry sector for this country. Includes a market overview and trade data.
India is an agrarian economy with half of its labor market representing agriculture-related sectors and more than 54 percent of the nation’s land categorized as arable. India is among the world’s leaders in terms of production volume for various commodities such as rice, wheat, cotton, sugar, horticulture, and dairy. Agriculture and related sectors such as forestry and fisheries account for 19.9 percent of the country’s GDP. Consequently, the agricultural sector plays an important role in Indian economics, politics, and society.
Indian agricultural production for food staples is highly monsoon (seasonal rainfall) dependent, and farm yields are generally below world averages. Low productivity is caused by many factors such as inadequate farmer education and training, heavy government regulation, inefficient food distribution system, poor infrastructure (which results in post-harvest losses of up to 40 percent for certain products), unpredictable weather, small average farm sizes (2.7 acres/1.08 hectares and shrinking), and domestic agriculture support programs and subsidies that distort market signals and hamper investment.
The agricultural sector is slowly shifting from traditional farming to horticulture and livestock (poultry, dairy, and fishery) production. The demand for fresh and processed products of all types is increasing as the population urbanizes, incomes rise, and consumption habits change. The growth of an efficient cold chain network from “farm to fork” will help curb the spoilage rate of agricultural output while helping producers capture value as products retain quality and provide increased benefits to consumers.
Imports of consumer-oriented foods, led by tree nuts and fresh fruits, are among the fastest growing segments of imported agricultural products and reached $5.14 billion in 2020. The market for imported foods has grown steadily due to a growing middle class, the millennial generation, affluent professionals, brand-oriented importers, modern retail outlets, E-Commerce retailers, and trend-setting restaurants.
Imported nuts and fruits feed into India’s traditional retail channels, with an estimated 90 percent of imported fresh fruit sold in roadside stands and open markets. Imported packaged and consumer-ready foods are found in gourmet grocery stores, imported foods sections of larger store formats, and in thousands of small neighborhood stores (kirana stores). While opportunities for imported food in the hotel, restaurant and institutional (HRI) and food processing sectors are improving, the Indian market remains relatively small due to high tariffs, ongoing import restrictions, and strong competition from the domestic industry.
India’s food and grocery retail business is estimated at $500 billion. This retail sector is dominated by traditional trade formats like neighborhood shops or kirana (mom and pop) stores, which hold approximately 88 percent of the total market share in sales. The market share held by modern trade formats such as supermarkets and hypermarkets along with E-Commerce retailers is expected to expand rapidly over the next five years as it fulfills the evolving needs of consumers.
The retail and e-retail sector has experienced noteworthy consolidation through new partnerships and acquisitions this year. India’s e-retail grocery market grew by 80 percent to $2.7 billion in 2020 primarily due to COVID-19 and the resulting lockdown. The sector is expected to grow rapidly over the next few years, due to expanding internet connectivity and rising consumer demand for convenience, value, safety/hygiene, ease of payment, and product variety. Opportunities for U.S. exporters exist in consumer-oriented products, especially tree nuts, fruits, and packaged/processed foods.
The emergence of larger chains and stores began around 2005, and the sector has grown to over 8,100 modern retail outlets across India in 2020. While many retailers are expanding and opening new stores, profitability continues to be an issue, including high real estate costs.
India’s casual dining and quick service restaurant sector is also on the rise, with nearly 60 foreign restaurant brands across the country. Another emerging trend is the rise of “themed” dining restaurants serving cuisines with a fusion of national and international foods. The use of E-Commerce has also expanded dramatically. Due to lockdown restrictions and social distancing norms, Indian customers turned to E-Commerce platforms to secure essential food supplies. Since the COVID-19 pandemic in 2020, the E-Commerce sector has seen significant changes as many food manufacturers, retailers, distributors, importers, and E-Commerce firms have come together to develop new distribution networks and take advantage of synergies. For example, leading food delivery and cab aggregator apps, such as Swiggy, Uber, Scootsy, and Zomato, have partnered with traditional and modern retails to deliver groceries.
Over time, India has developed export competitiveness in certain specialized products, making it the world’s 9th largest exporter in agriculture and related products. In 2020, India realized a $15.8 billion trade surplus of agricultural, fishery, and forestry goods. Leading exports consisted of Basmati rice, carabeef/beef frozen shrimp and prawns, cotton, and refined sugar.
Commodity Trade (In Alphabetical Order)
Condiments and Sauces
Indian condiments and sauces imports in 2020 reached nearly $18 million, of which nearly $4 million were from the United States. Other large supplies included Thailand, China, Malaysia, UAE, and several European countries. Retail and restaurant sector offerings are growing and demand for imported condiments and sauces is on the rise as consumers and restaurants experiment with these imported products.
India is one of the world’s largest producers and exporters of cotton. Nonetheless, India will continue to import extra-long staple (ELS) and quality long staple cotton (28-34 mm), with occasional imports of medium staple cotton when international prices are favorable. In February 2021, the government of India imposed a ten percent import duty on all raw cotton imports, increasing costs for textile exporters who use imported cotton for yarn, apparels, and home textile products. However, given the strong demand outlook in export markets, shipments of ELS cotton are expected to remain stable. The United States has been one of the leading suppliers of cotton to India over the past few years. U.S. cotton exports to India in 2020 were valued at $148 million, a decline of 75 percent compared to the previous year due to the COVID-19 pandemic. Imports from the United States have maintained a 50 percent market share of total ELS cotton imports into India since 2011. Other major cotton suppliers include Australia, Egypt, countries from the Commonwealth of Independent States, and West Africa. Indian mills that import U.S. Pima (a brand name for ELS cotton) and upland cotton are appreciative of its superior quality, consistency, higher ginning yield and yarn realization.
Craft Beer and Beer Ingredients
The Indian craft beer market is poised for tremendous growth, though it is still considered niche. There are more than 200 operating microbreweries and brew pubs across India, up from only 45 in 2016. Supplying ingredients such as malt, hops, and yeast for these businesses, and supplementing the breweries/pubs with imported beers is an emerging market opportunity as evidenced by growing trade and industry demand. Preferences for, and acceptance of, craft beers is expanding as the sector sees growth and market penetration across India in states that allow alcohol consumption. The microbrewery sector accounts for one percent of the total beer sector. A handful are expanding production lines and adding bottled or canned craft beers.
India provides market access for most fresh fruits. With a growing segment of consumers insisting on high quality standards and year-round availability, there is an increasing demand for imported fresh fruits. Imports of U.S. fresh fruits (including, but not limited to, apples, pears, cherries, and blueberries) into India in 2020 were valued at $40.7 million, with apples having the highest market share at $36.4 million. This represented a decline due to India’s 2019 tariff increase on apples from 50 percent to 70 percent in retaliation for U.S. steel and aluminum tariffs and trade disruptions in the wake of the COVID-19 pandemic. However, imports within the fresh fruits segment are expected to grow over the coming years, with new products likely to enter the Indian market (such as fresh cherries in 2021). In other fresh fruits, the demand for fresh and processed blueberries, cranberries, and cherries has grown. Imports of dried blueberries grew from a negligible amount in 2009, to 1,800 metric tons in 2020. Imports of fresh blueberries reached 100 metric tons in the same year. This rise in demand is also due to growing awareness about the health benefits of blueberries, as well as the fruit’s versatility and its use as a value-added ingredient in many products.
Hides and Skins
India’s hides and skins imports declined for the sixth consecutive year to $18.3 million during 2020, due in part to the COVID-19 pandemic. The United States is now the ninth largest supplier of hides and skin with Saudi Arabia, China, and Turkey the primary exporters to India. Last year, U.S. hides and skin exports dropped to just $359,000, down from $2.7 million the previous year. Raw hide imports have a zero tariff in India, while tanned leather imports have a tariff of 15 percent (basic duty). Imported raw material is primarily used by the local leather industry, and some of it is re-exported.
India is the world’s largest producer, consumer, and importer of pulses (peas, lentils, and beans), with annual imports reaching $1.56 billion in 2020. In 2017, imports reached a record 6.99 million tons ($3.9 billion), mostly from Canada, Myanmar, Australia, Russia, China, and the United States. However, since then, the GOI has taken a series of measures to restrict imports of pulses, raising the import duties on various pulses from zero to 30 to 60 percent, and imposing quantitative restrictions (QRs) on imports of major pulses.
Historically, the United States has been the supplier of higher priced green and yellow peas, lentils, and garbanzo beans (chickpeas), with imports reaching a record $183 million in 2014. However, due to trade restrictions, imports of pulses from the U.S. declined sharply from 369,000 metric tons in 2014 to 37,000 metric tons in 2020. Market sources report that imports of most pulses have declined to exceptionally low levels due to government-imposed restrictions that blocked out-of-quota imports and increased domestic production.
Evolving consumer lifestyles and increasing disposable income levels are leading to increased demand for imported snack foods, even with increased competition from local players. The 2019 imports of snack foods into India exceeded $76 million, with over $1.7 million from the United States. With growing awareness and inclination toward leading healthy lifestyles, demand for snacks made from more nutritious ingredients such as whole-grain cereals, specialty flours, and other products is growing rapidly.
Tree nuts have been one of the leading U.S. agricultural exports to India. In 2020, imports of tree nuts from the United States exceeded $913 million. The United States is the largest supplier of almonds (mostly in-shell) to India; other suppliers include Australia, Syria, China, Iran, and Afghanistan. Almonds are a preferred nut in India and are gaining popularity among the growing middle-income population due to their health benefits. India also imports significant quantities of walnuts, pistachios, and hazelnuts, mainly from the United States, Iran, Afghanistan, Pakistan, and the Middle East.
India is the largest tractor market in the world. Tractor production in India accounts for about 35 percent of global production volume. However, the utilization of tractors is low compared to other leading economies because the average size of farms in India is less than three acres.
Recent studies by PricewaterhouseCoopers indicate that the current level of farm mechanization in India averages around 40 percent (compared to 90 percent across other developed nations). Stronger emphasis is being placed on increasing productivity by moving away from traditional farming methods and adopting powered equipment. In addition, the Indian government has laid out an ambitious goal of doubling farmers’ incomes by 2022. The government is working to provide farmers with easier access to credit by developing farmer-friendly policies aligned with the new and growing trend of collaborative farming.
Various state governments, with federal government assistance, have opened rental centers for agricultural machinery and tools to make mechanization more accessible. This has opened the market for used equipment imports from the U.S. This is a crucial change, as purchasing such equipment is beyond the reach of most farmers.
The Indian import market for agricultural equipment is growing, but volume is still low. Farming systems in India need adequate mechanization and customization. India also needs specialized technologies to address key concerns such as rising greenhouse gas emission levels due to traditional agricultural practices such as crop stubble burning. U.S. companies offering specialized technologies for soil management, zero tillage, and modern equipment for agricultural activities such as sowing, weeding, harvesting, inter cultivation, post-harvest work, soil management, and bio decomposing, should explore opportunities in this market.
Precision Agriculture, Protected Cultivation, and Irrigation Technologies
Agriculture in India is vulnerable to the vagaries of weather because an estimated 52 percent of farmland is unirrigated and therefore dependent on rainfall. Small field sizes, uncertain climatic conditions, and environmental pollution from pesticides remain key challenges.
There is need for the precise utilization of agricultural inputs depending upon the crop, soil, and optimal weather conditions. U.S. companies offering equipment and technology for precision agriculture such as satellite positioning systems, remote sensing, geo-mapping, and protected cultivation solutions such as greenhouse structures, soil-less cultivation, hydroponics, and aeroponics should explore opportunities in India.
The FaaS concept is in its nascent stage but is becoming popular with a handful of local startups. Innovative and low cost FaaS solutions for optimizing land preparation, soil-health, crop management, post-harvest management, and machinery rental will benefit small farmers (average size three acres) with low capital.
Technology driven platforms for supply chain management, and digital farming technologies using Artificial Intelligence for agricultural management are transforming the sector. The Agri-Tech sector in India is also witnessing a rise in the number of start-ups. Some key Indian start-ups in this space include Ninjacart, Agrostar, Stellops, Cropin, and Jumbotail.
Food Processing and Packaging
India, as a net food exporter, ranks second in terms of global food production, and is the world’s largest producer of many commodities. However, a negligible amount of produce is processed in India. Food processing accounts for less than 10 percent of its perishable produce due to a lack of advanced processing technologies and poor supply chain infrastructure.
The food processing sector accounts for 32 percent of India’s total food market and 14 percent of manufacturing GDP. According to the Annual Survey of Industries, there are nearly 40,000 registered food processing units in the country that employ over 2 million people in food and beverage manufacturing. The food processing sector is growing at 12 percent per annum according to the USDA FAS GAIN Report. This growth is driven by increasing domestic consumption, changing market trends, consumer preferences for value-added products, and growing capabilities.
According to the Packaging Industry Association of India, the Indian packaging market size is expected to reach over $205 billion by 2025, partially driven by prolonged lockdowns during the COVID-19 pandemic.
Food wastage remains a critical challenge, with an estimated 40 percent of perishable produce going to waste. The government of India has plans to reduce wastage of agricultural produce by 50 percent in the next two years. To address rising concerns of food wastage and to position the country as a food processing hub, the government is facilitating policy reforms, capital subsidies, tax rebates, reduced custom duties, and access to credit for entrepreneurs investing in food processing units. The Ministry of Food Processing Industries (MoFPI) has sanctioned the establishment of 41 mega food parks in the country, with 22 operationalized as of April 2020. American companies providing solutions such as high-pressure processing technology, frozen food technologies, individual quick freezing (IQF), vacuum frying, freeze drying, and sugar reducing technologies should explore opportunities in India.
With an evolving middle class, the demand for fresh produce, meat and perishable packaged foods is rising, leading to opportunities for sustainable cold chain networks.
India’s underdeveloped cold chain infrastructure causes significant annual food loss estimated at $14 billion. Other challenges include a lack of cold warehousing infrastructure, lack of standards in construction and operation of facilities, and low awareness in handling temperature-sensitive products. In addition, growth in this sector is impeded by high energy expenses compared to western countries and the unreliability of electricity in many areas of the country.
The government has prioritized the development of integrated cold chain and supply chain related infrastructure. To encourage investments, it has initiated tax exemptions for cold chain operators, and concessions such as a reduction in excise and basic custom duties on imports of cold room and cold storage infrastructure related projects.
Components of Cold Chain infrastructure such as ripening chambers, pre-cooling units, pack houses, sorting and grading lines, and related machinery are in demand. MoFPI has implemented and sanctioned integrated cold chain projects to reduce post-harvest losses and develop the storage and transportation of temperature-sensitive goods. Under this scheme, around 291 cold chain projects are approved as of 2019, creating additional capacity for storage, individual quick freezing, and reefer vehicles. Plans are also in progress to develop a national food processing policy to build a food grid and national cold chain grid.
Competitors/Market Entry Barriers
India has a large domestic agricultural equipment manufacturing industry, dominated by tractors, and produces machinery that is well-adapted to the scale and technological requirements of Indian farmers. U.S. companies face competition from well-established domestic tractor manufacturers like Mahindra Tractors, Tractors and Farm Equipment Ltd. (TAFE), and the Sonalika Group. Foreign manufacturers with operations in India include Kubota, in addition to U.S. companies such as John Deere and New Holland. As with the tractors, India has a robust, internationally competitive irrigation equipment industry, notably Jain Irrigation, Netafim India, Finolex Palsson, Green India, and Kissan irrigation and U.S. companies offering niche and innovative irrigation equipment and technologies can explore the market.
Agricultural machinery and equipment import tariffs range from over 10 to 30 percent. Though food policy reforms suggest progress, import of food products and ingredients remains a challenge due to regulatory barriers and tariffs. While opportunities for imported food in the hotel, restaurant, institutional, and food processing sectors are improving, the Indian market remains relatively small due to high tariffs, ongoing import restrictions, and strong competition from the domestic industry.
The Indian cold chain industry is still at a nascent stage with a fragmented market and a focus on single commodity storage facilities. Although there is an import market for modern cold chain equipment and technology, importers face domestic tariffs that are passed on to consumers. Price sensitivity and limited awareness about the quality and lifecycle benefits of the imported products are critical challenges.
U.S. companies, particularly small and medium-sized enterprises, should consider approaching India’s markets on a regional level. The U.S. Commercial Service offices in New Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Bengaluru and Hyderabad (https://ww.trade.gov/india) can provide valuable information and connections with local businesses.
Popular Trade Events
- Agritechindia, Bengaluru International Exhibition Center, Bengaluru, Karnataka, India.
- Agri Tech India focuses on agriculture, farm machinery, dairy technology, agricultural processing technologies, agro startups and poultry and livestock.
- CII FoodPro , Dates to be announced, Chennai, India
- FoodPro is a food processing show and focuses on processing technology, refrigeration, and cold chain systems, processed and packaged foods, dairy equipment, and technology, packaging materials, retailing, and vending systems, hotel and kitchen equipment, bakery machinery and technology.
- EIMA Agrimach, Dates to be announced, IARI, PUSA, New Delhi, India
- EIMA Agrimach is an agro-machinery show and focuses on farm mechanization, agri-machinery and equipment, farm technologies, agri services, agro processing industries, and provides opportunity to global companies through B2Bs and country pavilions.
- World Food India, Dates are yet to be announced by MoFPI, New Delhi, India
- World Food India is an Agriculture and Food show that focuses on farm to folk technologies, food processing equipment, packaging, post-harvest technologies, cold chain infrastructure and refrigerated transport, processed foods, and retail.
- SIAL India, Pragati Maidan Exhibition Center, New Delhi, India.
- SIAL is a food and beverage show that focuses on food innovation and new trends.
- Indus Food, India Exposition Mart, Greater Noida, India. Indus Food is a food export promotion event that focuses on a variety of food and beverage products, processing, and packaging technologies.
For more information on export opportunities in leading sub sectors such as agricultural machinery, precision agriculture, protected cultivation, irrigation, farming-as-a-service, agri-tech, cold chain, and food processing equipment in India, please contact Commercial Assistant Lakshmi Davey.
Please also review the USDA FAS Exporter Guide and the Food and Agricultural Import Regulations and Standards – Annual Country report.
USDA Cooperators and State and Regional Trade Groups Active in India
- Almond Board of California
- American Pistachio Growers
- American Hardwood Export Council
- California Table Grape Commission
- California Walnut Commission
- California Olive Committee
- Cotton Council International
- Cranberry Marketing Committee
- Distilled Spirits Council of the United States
- Food Export Association of the Midwest USA
- Food Export USA-Northeast
- Pear Bureau Northwest
- Softwood Export Council
- Southern United States Association
- United States Soybean Export Council
- U.S. Grains Council
- U.S. Apple Export Council
- U.S. Dry Pea and Lentil Council
- U.S. Dry Bean Council
- U.S. Pecan Council
- U.S. Highbush Blueberry Council
- Washington State Apple Commission