India is considering simpler regulations to attract more corporate investment in agriculture, as Indian Prime Minister Narendra Modi seeks to keep his promise to double farmers’ income by 2022, a government adviser said.
Asia’s third-largest economy, in which more than half the population depend on farming for their livelihood, should relax rules for companies investing in contract farming, transport, marketing, warehouses and food processing, said Ramesh Chand, a member of government think tank National Institution for Transforming India, also known as NITI Aayog.
India’s farms should become outsourcing hubs for global supermarket chains, he said, adding that he expects an announcement on the policy in the budget due on Feb. 1.
“We need to simplify regulation, give incentives and remove hurdles in their way,” Chand said in an interview in New Delhi.
For any improvement in farmers’ income, private corporate investments in farming should at least double from the current 2 percent of total annual investments in agriculture, he said.
Jagdish Thakkar, a spokesman in the prime minister’s office, did not respond to a call seeking comment.
Indian states allow contract farming only for select crops. The federal government has sought public comments for a model contract farming act unveiled last month.
Greater investment by companies, including PepsiCo Inc, Hindustan Unilever Ltd and ITC Ltd, which buy from farmers in some states, could boost incomes faster at a time when India is predicted to expand at the slowest pace since Modi rose to power in 2014.
GDP is expected to grow at 6.5 percent in the year through March, mainly due to the poor performance of agriculture and manufacturing.
In consultation with states, Chand said his think tank is pushing for a new price support scheme.
Under the proposed market assurance scheme, states procuring crops other than rice, wheat and cotton from farmers would be compensated by the federal government for up to 40 percent of the losses on procurement cost, he said.
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