Can India’s farm, IT sectors become lucrative for Gulf investors?

A laborer works in a field on the outskirts of Gauhati, India, Thursday, Dec. 29, 2016. (AP)

Agriculture and information technology are the two areas in India that promise major business opportunities for Gulf countries. This is the result of the country framing economic policies to woo Gulf investors.

During his visit to the UAE, in August 2015, Prime Minister Narendra Modi invited companies to invest in the country. He hailed the country as the “land of opportunities” and described the UAE as India’s “gateway to the region and beyond” in its economic development and partnership with India.

India has in recent years tried to project itself as hub for people as well as businesses from around the globe. India is trying best to enhance ease of doing business and ensure international standards.

Indian markets are the preferred chasing ground for some leading global firms. Several sectors are pleasing with FDI as foreign investors are constantly putting their weight behind the gushing Indian economy.

There are several reasons these sectors look lucrative. Narendra Modi-led government has recently liberalized FDI regulations and allowed 100 percent FDI in in manufacturing of food products, in trading including e-commerce in food products manufactured and produced in India and 100 percent FDI in Agriculture and in Information technology through an automatic route.

Unutilized farm lands

“India has enough of unutilized agriculture purpose lands which can be got on long lease. Enough potential for exports & internal marketing. Agriculture equipments leasing is one of the biggest opportunity,” Amit Arora, CEO of BK Birla Foundation and Founder of Manuring It, a Rural Agriculture marketing company, said.

The National Bank for Agriculture and Rural Development (NABARD) plans to provide around 200,000 point-of-sale (PoS) machines in 100,000 villages and distribute RuPay cards to over 34 million farmers across India, to enable farmers to undertake cashless transactions. “Indian market can double its production by 2025,” Arora said.

Information technology industry comprises more of service-based companies than product based. Industry observers believe that gradual research and development in these areas can move toward product-based model with the success of the Make-in-India program.

One of the biggest benefits that the computer and IT industry provides in India is the employment it can generate. Other benefits are export and Foreign Direct Investments (FDI).

Industry insiders say that new markets have opened up in the Middle East, Africa, Eastern Europe, and South and South East Asia as the country has grown as a major destination for IT outsourcing.

IT opportunities

“There is no dearth of IT job opportunities in India. In fact, India is expected to overtake the US to have the most number of software developers in 2018 (5.2 million developers in India compared to 4.2 million in the United States,” CS Anuj Agarwal, Cyber law Expert and Chairman Computer Society of India, said.

According to him, India is the only large country posting that kind of growth that is accessible for investors. There is a strong investment case in India.

The 16th edition of GRDI – 2017 Global Retail Development Index – ranks the top 30 developing countries for retail investment worldwide and analyses 25 macroeconomic and retail-specific variables.

On India, the report said the country’s retail sector has been growing at an annual rate of 20 percent. Total sales surpassed the $1 trillion mark last year and the sector is expected to double in size by 2020.

“Retail is an integral part of Prime Minister Narendra Modi’s development initiatives, Skill India and Make in India, because of its job creation opportunity. Relaxed FDI rules in key sectors have improved the ease of doing business in India,” it said, adding that highly skilled personnel are available in India at cost-effective wages.

The icing on the cake has been the newly-introduced tax structure called the Goods and Service Tax (GST), which has reduced the burden of 14 tax compliances. Whether all this adds up to actually attract and enhance investments remains to be seen.

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Last Update: Wednesday, 20 May 2020 KSA 09:51 - GMT 06:51
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