The Impact of FDI Inflows on Agricultural Output: A Pan-India Study Across 30 Years of Economic Liberalisation

Abstract

In India, the agricultural industry generates 49% of employment and roughly 15.9% of the 2.7 trillion US dollar national GDP (2018–19). From a socioeconomic perspective, the agricultural industry is the most significant and requires attention at all levels. The Indian government is calling for the goal of achieving the epitome of the need to pursue all viable avenues for raising agricultural productivity and farmer profitability, with an added goal of accelerating efforts to achieve the Sustainable Development Goal of eradicating hunger, poverty, and malnutrition. It should be perceived as an integral part of a greater biome enveloping the entire primary sector including animal husbandry, fisheries, agricultural machinery, food processing industry and other allied activities. By compensating the investment and technological disparity through enhanced trade position, foreign direct investment (FDI) plays a major role in hovering productivity. The government has permitted 100% of foreign direct investment to enter the agricultural sector and is adamant about portraying it as a potential industry for players on the world stage. Along with increasing capacity and yield, innovative agricultural practices that increase cash inflow and yield can also be used by farmers thanks to foreign investment in agriculture. The agricultural sector of India is resilient; even in the face of the COVID-19 pandemic as it grew at a consistent 3.4 percent annual pace between 2020 and 2021, contributing 17.8 percent of the nation’s GVA in 2019–20 (inflation un-adjusted prices). In this paper, efforts have been made to establish a connotation between agricultural productivity and FDI, arable land, bank credit and agricultural raw materials imported using econometric tools. Considering a range of 30 years (1990-2020), time series records of food and non-food crops along with FDI inflows are associated and a robust relationship is recognised.

DOI - https://doi.org/10.65525/SVUP.9788199651548.2026.52-68