INDO-US COLLABORATION: THE AGRIBUSINESS OPPORTUNITY by Kalyan Chakravarthy1

Acronyms Used AEZ APEDA CDB CEPC CFTRI CIFT CIPHET EIC FTL GoI ICAR IIP IIPR MPEDA NDDB NDRI NHB NIN NRCM PFA PPRC SFAC Agri Export Zone Agricultural and Processed Food Products Export Development Authority Coconut Development Board Cashew Export Promotion Council Central Food Technological Research Institute Central Institute of Fisheries Technology Central Institute of Post Harvest Engineering & Technology Export Inspection Council Food Testing Laboratory Government of India Indian Council of Agricultural Research Indian Institute of Packaging Indian Institute of Pulses Research Marine Products Export Development Authority National Dairy Development Board National Dairy Research Institute National Horticulture Board National Institute of Nutrition National Research Centre for Mushroom Prevention of Food Adulteration Paddy Processing Research Centre Small Farmers Agribusiness Consortium

Kalyan is the Country Head, Food and Agribusiness Strategic Advisory & Research at YES Bank

1 INDIAN FOOD & AGRICULTURE SECTOR 1.1 Overview Indian agriculture contributes to approximately 20 per cent of the countrys GDP and provides livelihood to almost 67 per cent of the population, thus evidencing the agrarian nature of the economy. The positive demographic trends driving increased consumer demand for high value food products, recent government sponsored schemes and initiatives primarily aimed at attracting private sector participation and investment have enabled the infusion of much-needed vibrancy and a positive perception of the sector. Industry estimates indicate that the total turnover of the food market is around INR 2500 billion out of which, value-added food products comprise INR 800 billion. Among the emerging business avenues and growth options in the diverse Indian agribusiness sector, the food processing sector is particularly promising. The importance of the food processing sector can be gauged from the fact that it contributes to nearly 6.3 per cent of the country's GDP, directly employs approximately 13 million people and has the propensity to generate 2.4 times more indirect employment than the direct employment generated. The high growth rate (7 per cent p.a.) witnessed by the sector in the last decade and further improvement in growth rate expected in the years to come, present innumerable opportunities for investment across the entire agri-value chain.
Position of Indian Agriculture in Global Food Basket Due to the varied agro climatic zones, India has the potential to become the worlds food basket India is the worlds largest producer of Wheat, accounting for nearly 15% of global Wheat production India is the worlds largest producer of Milk (90 million tonnes) India ranks 2nd in Rice production in the world and is the largest exporter of worlds best Rice - Basmati India is one of the largest Edible Oil economies and produces about 1/10th of the world Oil seeds India is the largest producer & exporter of Spices India is the worlds largest producer of Tea and accounts for 1/3rd of the global Tea production India is the second largest producer of Fruits (50 million tonnes) & Vegetables (100 million tonnes)

1.2 Recent Developments in the Indian Food & Agriculture Sector The Economic Reforms introduced since 1991 have radically changed the course of the Indian economy and led to its gradual integration with the global economy. The innumerable changes initiated by the Government of India are expected to pave the way for the evolution of a globally competitive Indian agribusiness landscape. Significant among these are, the simplification of the existing food laws (to reduce redundancies and multiplicities in the certification of foods) and the Amendment of the Agriculture Produce Marketing (Development and Regulation) Act (APMC Act) by several State Governments which permit the farmers to sell their produce directly to the buyers outside regulated market yards. Such initiatives are expected to rationalize costs across the supply chain by facilitating organized farmer-processor relationships apart from infusing the much needed corporate investment in the sector.

Measures Undertaken by GoI which led to a Greater Private Investment in the F&A Sector Initiation of public private partnership in contract farming and direct marketing of farm produce Setting up of terminal markets and modernization of agricultural marketing infrastructure through private investment Amendments in the Essential Commodities Act and APMC Act to upgrade and reform agriculture markets Setting up of Futures Market for trade in agricultural products Tabling of Integrated Food Law and Warehouse Receipt bill in the Parliament Opening up of a separate window for self-help groups or joint liability groups of tenant farmers by the banks

The recent Government initiative of developing Modern Terminal Markets, for which INR 1.5 billion has been earmarked in FY 2006-07 under the National Horticulture Mission is another significant developmental measure. These modern terminal markets are aimed at providing professionally managed competitive and alternate marketing formats for farmers. The aggregation of sorted & graded material at these centers is expected to enhance the procurement by exporters and processors by meeting their quality as well as quantity requirements. A number of fiscal incentives have also been provided by the Government in the recent past so as to encourage value addition to agricultural produce (refer table 1).
Table 1: Schemes launched by GoI in the Food & Agriculture Sector Governing Ministry Ministry of Agriculture (MoA) Bodies/ Boards NHB, TMOP, TMH (NE), SFAC, CDB, NDDB Schemes Post harvest development, Cold storage capital investment subsidy, Technology development, MIS for horticulture, etc Technology upgradation/ modernization, HR, Quality assurance (FPO) and Codex, Strengthening nodal agencies, Backward and forward integration, Infrastructure development (Food parks) Export market development, Infrastructure, (AEZs) Quality, R & D, Transport assistance Etc Institutions NDRI, IIPR, NRCM PPRC

Ministry of Food Processing Industries

Ministry of Commerce

APEDA, MPEDA, Spices Board, Tea Board, Coffee Board, EIC, CEPC

IIP

Ministry of Science and Technology Ministry of CA and PD Ministry of Health and Family Welfare Ministry of HRD

CFTRI Directorate of Vanaspati, Directorate of Sugar Food safety (PFA) Food and Nutrition Board National Nutrition Mission FTLs, NIN

While these schemes are aimed at infusing increased investment and scale of operations in the sector, budgetary provisions as per the Union Budget 2007-08 such as reduced duty on food processing machinery (7.5% to 5%) and the total excise duty exemption on ready-to-eat packaged foods and instant food mixes are expected to increase affordability and consumption of processed foods. The Ministry of Food Processing Industries also plans to provide an INR 10 billion subsidy for setting-up of over six Mega Food Processing Parks around the country. The Indian Government has adopted a liberal stance on foreign participation in the food processing industries. Foreign Direct Investment has been encouraged and the approval process has been streamlined for greater convenience. The retail sector in India is rapidly transforming. India is the 4th largest retail market in the world with annual retail sales of more than $ 280 billion contributing to more than 10 per cent of the GDP and growing at a rate of 10 per cent pa. The recent past has witnessed the development of multiple retail formats (hypermarkets, department stores, supermarkets and convenience stores), a pan India expansion of retail chains, emergence of sub-urban retailing and an increasing preference for multi-brand outlets to single-brand stores. The sector has attracted the interest of some leading corporates (RPG, Pantaloons, Mother Dairy, ITC, Reliance and Aditya Birla Group). The emergence of organized retailing in the country has resulted in the creation of quality retail space, increased availability and demand for a variety of quality packaged fresh and processed produce. Growth of food retail chains such as Food World, Food Bazaar and Reliance Fresh is likely to yield a robust and efficient supply chain with elimination of redundant intermediaries. Although most of the present investments seem to be on the front end, corporate aspirations to match global standards of quality, cost and productivity shall drive qualitative changes across the supply chain and in the adopted farming practices. A number of investments in infrastructural support along the agri value chain have been initiated. Companies such as Snowman Frozen Foods (a Joint Venture between the Mitsubishi Group, Amalgam Foods and HLL) have stepped up their investments in the cold chain significantly. Snowman offers comprehensive transportation and storage facilities and handles retail distribution services of frozen and chilled foods. Its network covers 12 cold stores and 120 cities within India. To summarize, the several measures undertaken by the GoI have opened up new opportunities and have made the Indian agribusiness sector an investment destination for several large corporates in India and abroad. The huge business potential that lies untapped in the Indian agribusiness sector has attracted large global retailers like Wal-Mart and Carrefour to evince interest in spreading their wings in India. This is likely to transform the agribusiness landscape of the country which would witness huge investments, intense competition and a better choice for the consumer.

2 US FOOD & AGRICULTURE SECTOR 2.1 Overview The US agricultural scenario has changed dramatically over the last 200 years. The percentage of population engaged in farming has come down drastically to less than 2 as on date from 95 at the time of American Revolution. Only around 64 per cent of the farm land in US is owned by individuals and families and the rest 36 per cent is owned by several large and small corporations engaged in agriculture, making farming and its related industries a big business Agribusiness. Despite these changes, the nation produces safe, abundant and affordable food. US agriculture actually prospered as the settlements advanced from East to West. The western part of the US is endowed with good rainfall, rivers and underground water which promote irrigated agriculture. Also, large stretches of level or gently rolling land provide ideal conditions for large scale agriculture. Apart from these natural factors, others that contributed to the rapid increase in the agricultural productivity in US were the large scale adoption of latest technologies in farming and the rapid flow of settlers across the Mississippi River in the late 19th century. As per the 2002 Census of Agriculture, out of the total land area of 2264 million acres, total farmland was 938 million acres (41 per cent). Out of the total farmland, cropland occupied 434 million acres (46 per cent), woodland occupied 76 million acres (8 per cent) and pastureland occupied 395 million acres (42 per cent). Around 11.6 per cent of the cropland is irrigated. Out of the total water usage in US, 41 per cent is used for agriculture. In 2004, the ratio of agricultural GDP to agricultural population was $ 27, 651.

Table 2: Production of Major Commodities in US Commodity 2003 Value ($ million) 1. Maize 2. Indigenous Cattle Meat 3. Cow Milk, Whole, Fresh 4. Indigenous Chicken Meat 5. Soybeans 6. Indigenous Pig Meat 7. Wheat 8. Hen Eggs 9. Tomatoes 10. Grapes 11. Potatoes 12. Indigenous Turkey Meat 13. Rice, Paddy 29,852 24,313 20,554 17,411 14,550 8,866 9,954 4,498 2,493 2,796 3,012 2,764 1,924 Qty (000 MT) 256,905 11,755 77,289 14,927 66,778 8,755 63,814 5,180 10,522 6,027 20,766 2,529 9,034 2004 Value ($ million) 34,850 22,958 20,604 18,098 18,523 9,073 9,162 4,583 3,025 2,623 3,000 2,668 2,230 Qty (000 MT) 299,917 11,100 77,475 15,516 85,013 8,960 58,738 5,278 12,766 5,653 20,686 2,441 10,470 2005 Value ($ million) 32,563 23,041 21,315 18.698 18,046 9,180 8,907 4.628 3,025 2,976 2,772 2,689 2,133 Qty (000 MT) 280,228 11,140 80,150 16.030 82,820 9,065 57,106 5.330 12,766 6,415 19,111 2,460 10,102

14. Lettuce 15. Oranges 16. Apples 17. Sorghum 18. Sugar Beets 19. Strawberries 20. Groundnut Source: FAO

1,617 1,841 1,146 1,274 1,277 1,038 908

4,755 10,473 3,989 10,446 27,744 978 1,880

1,692 2,052 1,358 1,410 1,251 1,065 940

4,977 11,677 4,726 11,555 27,176 1,004 1,945

1,692 1,453 1,222 1,201 1,138 1,034 1,021

4,977 8,266 4,254 9,848 24,724 975 2,113

Agriculture in US is both a federal and a local responsibility with the United States Department of Agriculture (USDA) being the federal department responsible for the development of agriculture. The agricultural lobby is an extremely powerful interest group in American politics and has been since the founding of the USA. Government aid to agriculture includes research into crop types and regional suitability as well as many kinds of subsidies, some price supports and loan programs. The concerted efforts made by the USDA in terms of research and extension have placed US at the top in the production of many commodities.
Position of US Agriculture in Global Food Basket US is the worlds largest producer of Almonds, Blueberries, Cow milk, Cranberries, Grapefruit & Pomelos, Maize, Indigenous cattle, chicken, pig & turkey meat, Sorghum, Soybean, Strawberries and String Beans US is the worlds 2nd largest producer of Apples, Cherries, Game Meat, Hen eggs, Honey, Hops, Lettuce, Mushrooms, Oranges, Pistachios, Spinach, Tomatoes and Walnuts US is the worlds 3rd largest producer of Asparagus, Avocados, Carrots, Grapes, Hazelnuts, Linseed, Oats, Dry Onions, Peaches & Nectarines, Pears, Raspberries, Safflower seed, Sugar beets and Wheat US is the worlds 4th largest producer of Chillies & Green Peppers, Garlic, Groundnuts, Pumpkins & Gourds, Tobacco and Water Melon

2.2 US Trade in Food & Agriculture U.S. and global trade are greatly affected by the growth and stability of world markets. Changes in world population, economic growth, and income are most likely to alter global food demand. Other factors affecting trade are global supplies and prices, changes in exchange rates, government support of agriculture, and trade protection policies. With the productivity of U.S. agriculture growing faster than domestic food and fiber demand, U.S. farmers and agricultural firms rely heavily on export markets to sustain prices and revenues. According to an estimate, nearly one-third of the cropland in the United States produces crops destined for export. Exports have exceeded imports by a large margin since 1960, but this surplus has been narrowing. Historically, U.S. imports have increased steadily, as demand for diversification in food expanded. U.S. consumers benefit from imports because imports expand food variety, stabilize year-round supplies of fresh fruits and vegetables, and temper increases in food prices.

Table 3: US Agricultural Trade 2003 56.187 45.679 10.508 2004 62.401 52.656 9.745 2005 62.516 57.736 4.780 US $ billion 2006 68.721 64.025 4.696

Agricultural Exports Agricultural Imports Trade Balance

Source: US Department of Agriculture

Agricultural Exports In 2004, the percentage of agricultural exports in total exports was 8.
Table 4: US Exports by Major Commodity Group Item Soybean Fruits, nuts & products Vegetables & products Corn Wheat Red meat & Products Animal feeds & Oil meal Cotton & linters Poultry meats & products Other grain products Sugar & tropical products Juice, wine & beverages Hides & skins Dairy products Vegetable Oils Rice Other oilseeds Tobacco unmanufactured Animal fats & other products Other feed grains Live animals Other Total exports Source: USDA Jan Nov 2004 5720 4914 4837 5405 4728 2920 3447 3910 2278 2212 1765 1975 1626 1318 1505 1076 849 960 853 526 389 2473 55,686 US $ millions Jan Nov 2005 5761 5756 5232 4310 3928 3884 3671 3634 2797 2472 1984 1949 1640 1545 1491 1185 973 885 764 532 519 2480 57,391

Agricultural Imports In 2004, the percentage of agricultural imports in total imports was 4.
Table 5: US Imports (Customs Value) by Major Commodity Group US $ millions Item Jan Nov 2004 Jan Nov 2005 Fruits, juices & nuts 6298 7247 Vegetables & preparations 6394 6850 Red meat & products 5175 5111 Grains, feeds & oil meal 4260 4328 Wine 3116 3457 Malt beverages 2551 2878 Coffee 2059 2728 Cocoa 2287 2488 Dairy products 2187 2430 Vegetable oils 2162 2270 Live animals 1198 1693 Sugar products 1420 1483 Rubber, natural 1339 1390 Sugar, cane & beet 522 783 Other animal products 749 777 Tobacco, unmanufactured 630 591 Oilseeds 320 328 Poultry meats & products 342 322 Other 6109 6765 Total imports 49,119 53,920 Source: USDA

3 INDO US COLLABORATION 3.1 Historical Evolution of Indo-US Collaboration India and the US have multi faceted relations ranging from political, strategic to economic and commercial. India being the second fastest growing economy in the world and USA the largest economy, the economic relations between the two countries in the form of bilateral investments and trade constitute important elements in Indo-US collaboration. The economic reforms introduced in India since 1991 have integrated the Indian economy with the global economy, opening up a vast opportunity for foreign investment and trade. USA is the largest investing country in India in terms of FDI approvals, actual inflows, and portfolio investment. The stock of actual FDI increased from US $ 11.3 million in 1991 to US $ 4132.8 million as on August 2004. FDI inflows from the U.S. constitute about 11 per cent of total actual FDI inflows into India. US investments cover almost every sector in India, which is open for private participants. On the other hand, Indias investments in USA are picking up. Between 1996 and September 2004, Indian companies invested US $ 2080.36 million in the U.S. accounting for 18.7 per cent of total approvals. These investments were made largely in manufacturing and non-financial services.

USA is also Indias largest trading partner. By 2003, India became the 24th largest export destination for the US. In terms of exports to the US, India now ranks eighteenth largest country. Since 2000, the two countries have been making efforts to strengthen institutional structure of bilateral economic relations by means of the India-US Economic Dialogue that aims at deepening the Indo-American collaboration through regular dialogue and engagement. Indo-US Collaboration in Food & Agriculture There is a long history of cooperation between India and the US in the field of food & agriculture. Apart from the State tie-ups, US multinationals like Monsanto, Pepsico International, Cargill, Blue Diamond and Wal-Mart are venturing into different segments such as food processing, diversified agri-business like contract farming, grain business, seeds, almonds and retailing. In July 2005, Prime Minister Manmohan Singh and President Bush established a US India Agricultural Alliance to focus on promoting teaching, research, service and commercial linkages. In March 2006, during the visit to India by President Bush the two countries launched the bilateral Knowledge Initiative on Agriculture with a three-year financial commitment to link universities, technical institutions and businesses to support agriculture education, joint research and capacity building projects including in the area of biotechnology. After the launch of the Indo-US Knowledge Initiative on Agriculture, in a short period of 5 months, 19 scientists in the field of agriculture from India have received training in leading US laboratories in the areas of biotechnology, water management and food processing. For the year 2007, about 12 additional Indo-US Borlaug Fellowships are planned. The knowledge shared between India and US in agriculture will be put in practice through joint collaborative projects comprising cool chain development for food and vegetables involving CIPHET (ICAR), Ludhiana, CIFT (ICAR), Kochi for fish and marine produce, during 2007. A project on pea genomics has been initiated at National Research Centre consequent to the workshop on Genomics-enabled Molecular Breeding in Legume organized by University of California, Davis. Four projects have been identified under Indo-US workshop on water management. Several agricultural universities in India have made strategic tie-ups with their counterparts in US. For eg. the Acharya NG Ranga Agricultural University (ANGRAU), Andhra Pradesh has established tie-ups with: 1. Tuskegee University, USA for technical collaboration in Research and Teaching activities of Veterinary Science 2. USDA Washington DC, USA in support of the development of decision support systems for sustainable agriculture 3. International Food Policy Research Institute, Washington DC, USA 4. Texas A & M University, College Station, USA 5. College of Agriculture and Life Sciences, Cornell University, U.S. ANGRAU also entered into MoUs with the following Universities/ Organizations of USA during April and May, 2006 for capacity building in faculty and students of ANGRAU and collaboration in extension and research activities in the fields of Biotechnology, Agribusiness, Agricultural Water Management, Post Harvest Technology, Environmental

Science, Food Science & Nutrition, Food Processing & Value Addition, Gender & Equity Issues, Crops, Soils, Rural Development, etc: 1. Kansas State University 2. University of California, Davis 3. Auburn University, Auburn, Alabama 4. International Fertilizer Development Centre, Muscle Shoals, Alabama 5. University of Florida, Gainesville, FL 6. IOWA State University of Science & Technology, Ames, Iowa 7. North Carolina Agricultural & Technical State University, Greensboro, North Carolina. Apart from agricultural research, another thrust area that has been identified was agricultural marketing. For adopting the best of international practices in this sector and strengthening the agricultural marketing system of the country, a collaborative project has been initiated between USAID and the National Institute of Agricultural Management (NIAM). Following discussions between the Joint Secretary (Marketing), Ministry of Agriculture, Govt. of India, Director General, NIAM and the Representative of US Embassy, USAID, New Delhi, a team of experts from USDA and USAID office in New Delhi visited NIAM in April 2005 to explore the possibility of collaboration for Strengthening of Agricultural Marketing System in India. After detailed discussions during the visit of the team, several areas were identified for possible collaboration viz., Marketing Infrastructure Design & Planning, Food Safety & Quality, Marketing Extension, Grading & Standards, Market News & Information Dissemination with Capacity Building through Training of Trainers and Technical Assistance. Three states namely Himachal Pradesh, Rajasthan and Karnataka have been selected as pilot states. In order to make situation specific Training Needs Assessment (TNA), four teams of US agricultural experts visited India between December 2005 and May 2006. In December, 2005, a team of experts from USAID on Food Safety and Quality visited the country. The experts from USAID along with the faculty members of NIAM visited the three project states and had interaction with different stakeholders. On that basis the team of USAID experts has submitted its report on Food Safety Needs Assessment. A USAID team on Marketing Extension visited the country in January, 2006. These experts along with the NIAM faculty members visited all the three states and had a series of meetings with different stakeholders such as farmers, KVKs, APMCs, market functionaries, government officials, Universities, etc. The team has also submitted its report identifying the major areas of interventions and training needs on marketing extension. An MOU was signed between USAID and NIAM on 11th of July 2006 providing for collaboration in various fields for strengthening the agricultural marketing system as approved by the Ministry of Agriculture in consultation with the Ministry of External Affairs, Government of India and by the US Department of Agriculture. The period of collaboration under the MOU is three years. A National Level Workshop was organized at NIAM from July to August, 2006. The reports of the visits and the draft training outlines were presented and discussed in the workshop at Jaipur with participants from the pilot states, universities, central and state agencies and other stakeholders to finalize the training modules as well as the mode of implementation of the training for NIAM and state government trainers. USAID have suggested a Work Plan for the implementation of the program during the current year. The work plan has been prepared in consultation with the USAID officials and other concerned agencies including the participants from the state governments of the pilot states.

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The above collaborations are likely to lead to enhanced transfer of knowledge and technology between US and India which is expected to transform the Indian agribusiness landscape.

3.2 Indo-US Trade Trade and commerce form a crucial component in the rapidly expanding relations between India and US. From a modest $ 5.6 billions in 1990, the bilateral trade in merchandise goods has increased to $ 31.92 billion in 2006 representing an impressive growth of 470 per cent in a span of 16 years. Indias merchandise exports to the U.S.A. grew at 16.07 per cent from US $ 18.80 billion in 2005 to US $ 21.83 billion in 2006. US exports of merchandise to India increased from US $ 7.96 billion in 2005 to US $ 10.09 billion in 2006, an increase of 26.31 per cent. Indias major export products include gems & jewellery, textiles, organic chemicals and engineering goods. Its main imports from the U.S. are machinery, precious stones & metals, organic chemicals, optical & medical instruments and aircraft & aviation machinery.
Table 6: Indo-US Bilateral Merchandise Trade US $ millions Particulars Indias export to US US exports to India Total Bilateral Trade 2003 13055 4980 18,035 2004 15572 6109 21,681 2005 18808 7958 26,766 2006 21826 10091 31,917 Jan 2007 1999 1032 3,031

Source: US Department of Commerce

Agriculture is beginning to play a bigger role in the Indo-US trade. Indias exports of agricultural products to US were to the tune of $ 1.3 billion occupying a share of only 1.4 per cent in USs total imports of agricultural products in 2005. On an average, Indias agricultural exports have grown by only 3 per cent per annum for the period 2000 to 2005, which is far below the potential. Likewise, there is potential to enhance US farm exports to India. We need to look at the rapid growth in Indias farm trade in Asia and draw appropriate pointers on how to accelerate bilateral trade. It is therefore, important to work on exploring the potential of partnership and bilateral collaboration in agriculture. 3.3 Opportunities for Collaboration in the Food & Agriculture Sector Based on the strengths and opportunities in both the countries the following areas have been identified for collaboration in the Food & Agriculture Sector: Food processing Dairy Cold Chain Infrastructure Agri-Biotechnology Bio-fuels 3.3.1 Food Processing India is one of the largest food producers of the world. It is the largest producer of fruits, vegetables, milk and livestock in the world (India has 53 per cent of the world's buffaloes, 23 per cent of sheep and 842 million poultry - sixth largest in the world). Though India accounts for almost 10-12 per cent of the global production of fruits and vegetables, yet less than 2 per cent of the production is processed. The national policy aims to increase the level of food
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processing from the present 2 per cent to 10 per cent by 2010 and 25 per cent by 2025. An investment of around US $ 28 billion is required in the areas of infrastructure, packaging and marketing to raise the food processing levels by 8 to 10 per cent.

Policy Initiatives by the GoI The Indian government has abolished licensing for almost all food and agro-processing industries except for some items like beer, potable alcohol & wines, cane sugar, hydrogenated animal fats & oils etc., and items reserved for the exclusive manufacture in the Small Scale Industry (SSI) sector Automatic investment approval (including foreign technology agreements within specified norms), up to 51 per cent foreign equity or 100 per cent for NRI and Overseas Corporate Bodies (OCBs) investment, is allowed for most of the food processing sector except malted food, alcoholic beverages, including beer, and those reserved for SSIs Use of foreign brand names is now freely permitted Most of the items can be freely imported and exported except for items in the negative lists for imports and exports. Capital goods are also freely importable, including second hand ones in the food-processing sector Wide-ranging fiscal policy changes have been introduced progressively. Excise and Import duty rates have been reduced substantially. Many processed food items are totally exempt from excise duty Customs duties have been substantially reduced on plant and equipment, as well as on raw materials and intermediates, especially for export production Corporate taxes have been reduced and there is a shift towards market related interest rates. There are tax incentives for new manufacturing units for certain years, except for industries like beer, wine, aerated water using flavoring concentrates, confectionery and chocolates

Rapid urbanization, increased literacy, changing lifestyles, more women in the workforce and rising per capita income have led to rapid growth and changes in the demand patterns creating new opportunities in the food processing sector. An average Indian spends about 50 per cent of household expenditure on food items. With a population of over 1 billion and a 350 million strong urban middle class and changing food habits, the processed food market in the country is expected to grow significantly. The potential for processed foods is estimated to grow from INR 5300 billion in 2003-04 to INR 7800 billion in 2009-10 to INR 11,500 billion in 2014-15. The potential for primary processed foods is estimated to grow at a rate of 7 per cent while the potential for value-added foods is estimated to grow at a rate of 15 per cent. The share of value added products in the processed food consumption is expected to grow from 38 per cent in 2003-04 to 58 per cent in 2014-15.
Table 7: Market Potential for Processed Foods 2003-04 49 29 20 1160 254 906 2009-10 155 118 36 1730 452 1274 INR billion 2014-15 345 288 56 2450 825 1627 12

Fruits and Vegetables Organized Unorganized Dairy Organized Unorganized

Edible Oil 500 Organized 50 Unorganized 450 Meat and Poultry 27 Meat 20 Poultry 7 Non-Alcoholic Beverages 101 Tea 78 Coffee 22 Grains 1802 Organized 609 Unorganized 1193 Marine 18 Sugar and Sugar based 285 products Sugar 265 Confectionery 12 Chocolates 8 Alcoholic Beverages 232 Beer 41 Spirits 190 Wine 3 Pulses 402 Aerated Beverages 80 Malted Beverages 12 Total (Approx) 5,300 Source: Ministry of Food Processing Industries

692 88 603 64 40 24 151 122 30 2227 889 1338 30 383 349 18 16 513 73 420 20 605 21 19 7,800

925 156 769 129 67 62 198 157 41 2668 1208 1460 51 492 424 30 37 1106 117 930 60 809 43 27 11,500

Indias relatively inexpensive but skilled workforce can be effectively utilized to set up large, low cost production bases for domestic and export markets. Key investment opportunities, both for catering to the domestic market as well as for exports, exist in many areas of food processing in India. Egg & egg products, meat & poultry, fruits & vegetables and beer & alcoholic drinks are some of the areas with huge potential. The scope for investment in Indian horticulture is vast and encompasses areas such as Technology tie-ups for post harvest technology, bulk storage (including temperature controlled warehousing), bulk handling (including packaging) and cold chain facilities. In addition, the inadequate availability of sophisticated production protocols for intermediate products in India also presents an opportunity for US entrepreneurs. A) Egg & Egg Products India ranks fifth in the world with an annual egg production of almost 1.61 million tonnes. Presently there are only five egg powder plants in India. These plants are not adequately equipped to scale up and meet the increased world demand. Modern production facilities and technology tie-ups can be secured to meet the increasing demand of the domestic as well as that of key importing countries such as Japan and Europe. B) Poultry & Meat Products

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Poultry meat is the fastest growing animal protein segment in India (CAGR of 11 per cent through 1991-2003). The sector is characterized by the following: Prevalence of small and unorganized players with only a few organized players selling branded, processed products (Eg. Godrej Real Good Chicken, Venky's Chicken) High feed and labor costs (which account for almost 60-70 per cent and 20 per cent respectively of the total production cost). Despite the low labor cost, competitiveness of the Indian poultry industry has been adversely affected due to the high feed costs (price of Indian poultry products is almost 50 per cent higher than global price levels) Indian poultry are exported mainly to the Middle East and the Maldives and more recently Japan. Thailand's competitiveness in the international market has been adversely affected of late due to increase in labor costs, thereby providing an opportunity for India to tread into the highly attractive Japanese market. Investment in better poultry breeds, adoption of improved management practices, effective and efficient feed formulations are expected to bring success in both the domestic as well as international markets and present an attractive investment option. Investments in modern abattoirs, processing, packaging and distribution systems are also the need of the hour and merit investments. India has the world's largest cattle population (1/2 of the total buffalo population and 1/6th of the total goat population of the world). Most meat production is undertaken by the unorganized sector. Increased emphasis on quality and changing consumer tastes require greater investments in modern slaughter facilities and development of cold chains. Changing consumer lifestyles has meant increased willingness to explore ready-to-eat and semiprocessed meat products, thus creating greater opportunities within the segment. C) Marine and Aqua Products With a 7500 km coastline, 3 million hectares of reservoirs and 1.4 million hectares of brackish water, India offers a huge potential for marine and aqua products. However, it ranks second in terms of inland fisheries. India's production is only 1/6th that of China (the world leader). Almost, 60 per cent of the fish production is from marine sources and shrimp is the major component of marine exports. The existing post-harvest, processing and packaging technologies in the Indian fishing industry are grossly inadequate. While Individual Quick Freezing (IQF) plants have recently been established, their capacity is still largely insufficient. Since, processed IQF marine products fetch better prices than conventional block frozen materials in the foreign markets, investment in this segment is an attractive option. Also, the deep sea fishing industry today stands on a very weak footing. Investment in deep sea fishing vessels for prawns, shrimp, squid, tuna, cuttlefish, octopus, red snappers, ribbon fish, mackerel, lobster, cat fish etc. is required. Other aspects requiring greater attention are quality improvement, technology upgradation, development of value added products, development of infrastructure and improved methods of handling and preservation. There is a significant opportunity for US players for re-exports of these marine products to EU countries. D) Fruits, Vegetables & Packaged Convenience Foods India accounts for almost 10 per cent of the global production of fruits and vegetables, yet less than 2 per cent of the production is processed. This in itself is indicative of the vast

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potential that the Indian food processing industry holds. The scope for investment in Indian horticulture is vast and encompasses the following key areas: Identification and development of varieties that are amenable to specific processing requirements Technology tie-ups in areas of post harvest technology, bulk storage (including temperature controlled warehousing), bulk handling (including packaging) and cold chain facilities Availability of sophisticated production protocols for intermediate products is also largely inadequate Development of cost efficient packaging equipment and materials E) Alcoholic & Non-Alcoholic Beverages The deep-routed social aversion to alcohol consumption in the Indian society is fast changing. The mushrooming pubs and night clubs are evidence to the changing mindset of the urban consumer. Increased overseas travel and media exposure has also led the change in consumer attitudes towards alcohol. A number of foreign brands such as Bacardi, Seagrams and UDV, are now bottled in India. Presently, the production of alcoholic drinks from non-molasses sources is very small and offers a huge opportunity for investment. The wine industry, although in a nascent stage, is poised for growth. Approximately 38 wineries are presently operating in the country with a total production of 6.2 million liters annually. Current consumption is 7,62,000 cases per year with a very low per capita consumption of 0.07 liters. Availability of raw material, modern wineries and competitive labor costs make the Indian wine competitive. Inspite of a fast expanding market for alcohol, almost 65 per cent of the Indian population still prefers non-alcoholic beverages. The Indian consumer has traditionally had a high preference for Cola, Orange and Lemon flavored beverages. However, with increased health consciousness, consumers are now turning to other options such as fruit juices and drinks. While a few well established companies have forayed into this very attractive segment which is growing at more than 30 per cent, the potential is largely untapped and the consumer is largely starved for choice. Tremendous scope exists for investments in packaged health drinks, fresh fruit drinks, juices, smoothies, energy drinks, flavored tea and ethnic Indian drinks (such as thandai, sharbat, nimbu-pani, aam panna, etc.). F) Food Retail The Indian food retail industry is fast changing. The annual food & grocery sales are about US $ 154 billion constituting about 77 per cent of the total retail sales. The organized food retail is expected to grow by 30 per cent in the next 5 years. India ranks first in terms of emerging markets in retail and is deemed as a Priority 1 market for retail. Further, India has the highest density of retail outlets of any country in the world. This rapidly growing sector provides ample opportunity for foreign investment. These investments could be in the areas of backward integration and supply chain management which offer immense scope for collaboration. The recent JV between Wal-Mart and Bharti is one such example.

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Case Study: The Bharti Wal-Mart Retail Venture In November 2006, Bharti Enterprises Ltd, a leading business group in India has signed an MoU with the $316 billion Wal-Mart Stores Inc, the worlds largest retailer, to explore business opportunities in the Indian retail industry. The 50:50 JV will operate in areas where the government allows foreign investment in retail such as cash-and-carry and logistics. The company is looking at 10 million square feet of retail space, which would include hypermarkets, supermarkets and convenience stores. The retail shops will be owned by Bharti Enterprises under the Wal-Mart franchise paying a royalty of 2 to 3 per cent of sales to Wal-Mart for using its brand name. While Bharti would manage front-end of the retail venture on its own, the proposed JV with Wal-Mart would be for back-end chains, including logistics, supply chain and cash-and-carry. The Bharti-Wal-Mart venture would make an initial investment of US$ 100 million, which could further increase to US$ 1.46 billion. Wal-Mart already sources goods worth $1.5 billion from India. This is expected to rise to $10 billion over the next few years. The deal will give Wal-Mart access to Bhartis domestic network, while Bharti, in turn, will get access to Wal-Marts overseas network. The venture is expected to generate employment for about 60,000 people.

3.4.2 Dairy The Indian dairy sector is another attractive area for foreign investment. The basic infrastructural elements for a successful enterprise like key elements of free market system, availability of raw material (milk), an established infrastructure of technology and supporting manpower are in place in India. The dairy food processing has an immense potential for high returns and shows good growth prospects. With a fast growing domestic market and a potential for export in the Middle East, Singapore, Malaysia, Indonesia, Korea, Thailand, Hong Kong, etc., Indian dairy food processing is likely to provide attractive returns on the investment. The various areas for possible collaboration are: A) Milk & Milk products Only 15 per cent of the milk produced in India (annual production of approx 90.0 MT) is processed through the organized sector. The per capita availability of milk (229 g per day) is much lower than the world average (285g per day) and its consumption is highly skewed towards the urban consumer. Presently, over 46 per cent of the total milk is consumed in the form of liquid milk, 47 per cent as Indian dairy products and 7 per cent as western dairy products. Interestingly, while the cost of milk production is amongst the lowest in the world, the prices of dairy products are amongst the highest. The dairy sector is expected to witness a growth rate of over 5 per cent per annum, largely on account of the following factors: High income elasticity of demand for dairy products in India Changing dietary patterns of the Indian consumer are expected to cause a dramatic increase in the demand for packaged, homogenized & pasteurized milk, flavored milk, cheese varieties and ethnic Indian dairy products. Reform of the EU Dairy Policy - in 2003 (in line with the WTO) has opened significant trade opportunities for dairy producers. Low farm gate prices and proximity to milk deficit markets provide India with an edge over other producers Increased organized private sector participation in dairy production and processing is likely to occur due to the following reasons:

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High profitability of the dairy products business (18-20 per cent per annum) Prevalence of small-scale or cottage industries which bring out products which are usually of inconsistent quality & hygiene standards and unable to cater to market needs Entry of organized players can help enhance product shelf life without compromising on food safety and hygiene Poor management of most cooperative dairies - though cooperatives have played a major role in the evolution of the Indian dairy sector, today most cooperatives (with the exception of a few in North and West India) are poorly managed and are financially ailing Lack of scale in small family run businesses Low cattle productivity and the absence of adequate quality controls are major causes of concern in the Indian dairy industry. The poor quality of Indian milk is due to the lack of adequate temperature controlled storage & transport infrastructure and contamination through equipment. Thus, investment in both bulk cooling equipment (to preserve and improve milk quality) and high-end processing facilities for high quality milk & value-added products is required. Ethnic products are largely produced by the unorganized sector (halwais) wherein product quality, hygiene standards, storage and packaging norms are sub-standard. Increased penetration by large scale organized players in this highly attractive segment would enable the much needed traceability and quality check. Whey and whey products are an attractive option given the growing importance of whey products in high-end food and non-food applications in the international markets. Increased imports of intermediate food products such as cheese powder, casein and lactose are indicative of the market potential for these products and investments for manufacturing the same domestically will be viable investment options. B) Dairy/ Food Processing Equipment There is a huge potential for manufacturing and marketing of cost competitive world-class food processing machinery. C) Food packaging equipment There are also opportunities in the manufacturing of both machinery and packaging materials that help develop brand loyalty and a clear edge in the marketing of dairy foods. D) Small dairy units There are a number of small dairy units which cannot justify capital investment in specialized technology like cheese slicing, dicing line, cheese packaging, butter printing and aseptic packaged fluid products. Investment could be made in establishing centralized and specialized state-of-the-art facilities which could be utilized on a contractual basis by such smaller units. 3.4.3 Cold Chain Infrastructure With a production of around 160 million tonnes of fruits and vegetables, India accounts for almost 10 per cent of the global production of F&V. Most of the F&V produce is perishable in nature and requires controlled atmosphere in terms of temperature and humidity for longer storage. The absence of adequate cold chain infrastructure in the country causes enormous wastages of the F&V produce. According to an estimate by the National Council for Economic Research, the post harvest losses of commercial F&V are around 30 per cent

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which translates to about INR 230 billion pa. This necessitates the establishment of cold chain infrastructure for reducing the post harvest losses in the F&V. The cold chain infrastructure maintains the temperature of the produce throughout the supply chain from the point of harvest to the consumer. There is an immediate requirement for captive cold storages close to the F&V production centers and auction houses. Also, there is a growing demand for pre-cooling systems, large cold storages for warehouses attached to food and beverage plants. Currently there are very few organized players in the refrigeration and cold chain management sector in India such as Snowman Frozen Food, Voltas, Blue Star, Carrier, Frick, Kirloskar, Rinac, etc. and a large number of unorganized players. Recently, Snowman Frozen Foods set up a pre-cooling center at Hiriyur in Chitradurga, a pomegranate growing zone in Karnataka. A cooling outlet has been set up for export where the cold chain is managed from harvesting to shipment. It has also associated itself with growers in Nashik, a grape growing region. It is also planning to set up cold stores for mangoes in Tamil Nadu and Karnataka. APEDA (Agricultural and Processed Food Products Export Development Authority) is spearheading the export of fresh food and vegetables and as a result of this drive, modern perishable cargo centers have emerged at all major airports in the country. The cold chain infrastructure consists of 2 segments viz., Stationery and Transport refrigeration. Though the stationery refrigeration systems are coming close to meeting world class standards with increases in the level of automation, the transport refrigeration will have to rapidly develop in order to meet the growing demand. Currently, the transport refrigeration is largely fragmented and unorganized, with a few organized players like Snowman Frozen Food, Crystal Roadways, etc. and the transport refrigeration equipment is being provided by Ingersol Rand and Carrier refrigeration. With the changing life styles, the increasing demand for quality foods and the booming retail industry, the demand for the transport refrigeration is bound to grow a lot.
The Golden Quadrilateral: A Shot in the Arm for Road Transportation The GoI launched the largest express highway project in India viz, the Golden Quadrilateral, under the management of the National Highways Authority of India (NHAI) under the Ministry of Road, Transport and Highways. It is the first phase of the National Highways Development Project (NHDP), and consists of building 5,846 Km of four/ six lane express highways connecting Delhi, Mumbai, Kolkata and Chennai at a cost of INR 580 billion (US$ 12.317 billion at 1999 prices). More than 90 per cent of the work under the project has been completed. The GoI constituted a Committee on Infrastructure which has taken a decision for developing nearly 50,000 Km of national highways under NHDP Phase 1 to 7 at an estimated cost of INR 1720 billion by 2012

The stationery refrigeration segment is also highly unorganized with more than 90 per cent of the cold storages owned by individuals. As a result, most of the current cold storages are outdated and are not up to the international standards. The new cold storages are being set up using the latest technology and the old ones are being revamped on a large scale. The entry of organized players is expected to transform the Indian transport refrigeration into an Integrated Logistics Management wherein the logistics provider would take care of Storage, Transportation and Distribution. Currently, in India Snowman Frozen Foods is the only player offering complete integrated logistics management services, thus showing a huge potential for investment by foreign companies in this high demand sector.

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3.4.4 Agri-Biotechnology Over the last two decades, biotechnology has made rapid strides in India and emerged as a driving force of radical innovation. India has recently been identified as one of the five emerging biotech leaders in Asia-Pacific by the analyst firm Ernst & Young. A host of incentives have been provided by the Indian government for attracting investments in the biotechnology industry.
Government Incentives for Investments in the Biotechnology Industry A single window processing mechanism for all mega biotechnology projects involving FDI of US$ 22 million or more under the Foreign Investment Implementation Authority (FIIA) with its Fast Track Committee (FTC) 100 per cent foreign equity investment is possible in manufacturing of all drugs except recombinant DNA products and cell targeted therapies Customs duty exemption on goods imported in certain cases 50 per cent weighted tax deduction & 100 per cent rebate on R&D expenditure 125 per cent rebate if research is contracted to public funded R&D institutions 3 year excise duty waiver on patented products Joint R&D projects are provided with special fiscal benefits Custom & excise exemption on all drugs and materials imported or produced domestically for clinical trials Removal of the restriction of minimum export obligation of approximately US$ 4 million to enable organizations to avail exemption from customs duty on certain equipments R&D units with manufacturing facilities can avail of full customs duty exemption for certain equipment, up to 25 per cent of the previous years export receipts Incentive of 100 per cent exemption from tax on profits for first 5 years and 25 per cent after that, for agro-processing industries Setting up of bioclusters i.e. biotech parks on the lines of software tech. parks

Offlate, Agri-biotechnology is gaining prominence in India with a focus on transgenic rice, corn, chickpea and several other food crops, in addition to developing different varieties of Bt Cotton. According to an estimate the Agri-biotechnology sector registered a growth of over 150 per cent in 2004-05 with a value of US$ 73.3 million. A majority of this (around 77 per cent) was accounted by the Bt Cotton seeds sales and the rest came from bio-pesticides, biofertilizers, etc. According to an estimate, after the introduction of Bt cotton in India in 2002, the cotton production has increased from 140 lakh bales to 270 lakh bales in a span of 5 years. India was one of the early movers in the matter of bio-safety laws and policies and adopted bio-safety rules in 1989. Bt cotton was approved in India in 2002 after rigorous risk assessment studies conducted by different committees. To strengthen India's capacity as also to implement the Cartagena Protocol on Bio-safety, the country is implementing a GEFWorld Bank Capacity Building Project on Bio-safety. Under this project, training workshops are carried out for all stakeholders and it is an incremental factor for India's national capacity to implement the Cartagena Protocol. It is estimated that by 2010, India has the potential to become a major grower of transgenic rice and several genetically engineered vegetables. According to some estimates, the cost of developing a technology in India is quite low. The total cost including development of gene transformation, screening and regulatory approvals which works out to about US$ 43 million in the US, can be as low as US$ 2.2 million in India.

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Several research institutes in India are working in the area of Agri-biotechnology. For example, the Indian Agricultural Research Institute (IARI) and the National Centre for Plant Genome Research (NCPGR) are jointly working on development of molecular marker based linkage map for chickpea. NCPGR has also developed nutritionally enriched potato lines by transfer of Ama1 gene of Amaranthus. The Delhi University is pursuing studies on production and characterization of osmotic stress tolerant transgenic plants of Brassica juncea. Meanwhile, the University of Delhi, South campus, and IARI have spearheaded the Indian initiative on Rice Genome Sequencing. The Indian government has already started a US$ 8 million functional genomics project, which will help to identify the useful genes. This project has created a critical pool of trained scientists, infrastructure and capability to conduct genome wide research on a range of agronomically important crops. Bio-fertilizers & bio-pesticides The total market for the bio-pesticides and bio-fertilizers in India is estimated at US$ 17.8 million. The bio-pesticides market is growing at a rate of 25-30 per cent.. Conservative estimates show that a 10 per cent saving through the use of bio-fertilizers will result in an annual saving of 1.094 million tonnes of nitrogenous fertilizers costing around US$ 119 million. There are several types of bio-fertilizers being marketed in India. Some of the prominent ones are Rhizobium, Azotobacter and Azospirillum. A number of universities and institutes are working in the area of bio-fertilizers. The University of Hyderabad, National Research Centre for Plant Biotechnology, IARI; BARC Mumbai and TERI are working on development of transgenic microorganisms with high efficiency for nitrogen fixation, and phosphate solubilization. Scientists at the New Delhi based International Centre for Genetic Engineering and Biotechnology (ICGEB) have developed a microbe-based bio-pesticidal formulation for the control of a range of agricultural pests. The formulation has been found effective in controlling diamond-back moth in cabbage and cauliflower; white woolly aphids in sugarcane; mealy bugs in grapes, citrus & mango; and white ants in teak plantations. The formulation is being commercially launched by its industry partner in 2005. Indian and US companies and institutes can collaborate in the field of Agri-biotechnology in several ways such as: US companies can form JVs with Indian companies, enter into partnerships or establish technology transfer agreements or strategic research partnerships with key research institutions US companies can collaborate with Indian companies and sell products and services in the biotechnology sub-sectors like bio-pesticides. 3.4.5 Bio Fuels Around 70 per cent of Indias fuel oil requirement is met through imports. It was estimated that even if 1/10th of the oil import could be substituted with bio-diesel, it is worth US$ 3 billion pa at 2004 oil prices. Worlds depleting oil reserves, increasing cost of crude oil, and emphasis on sustainable agro-industrial development demand for an alternative renewable source of energy. Crop residues, bio mass and non-edible oils can be used as sources for production of bio fuels. The National Mission Bio-diesel Programme envisages achieving 5 per cent bio-diesel blend in diesel in nine states followed by a pan-India rollout. Later, the bio-diesel blend percentage will be increased to 10 per cent across the country and further towards more than 10 per cent blend in the entire country. Many states have formed nodal

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agencies for bio-diesel development. For instance, the Uttaranchal Bio-fuel Board has planted Jatropha in over 10,000 hectares in 2005. Trial runs on 5 per cent bio-diesel blend with diesel are being undertaken by Indian Railways, Haryana Roadways (IOCL) and BEST Buses (HPCL). The role of the private sector in this area is at a relatively nascent stage. Automobile companies such as Daimler-Chrysler and Tata Motors Ltd. (TML) have been conducting trial runs with bio-diesel, in addition to doing R&D on process technology, etc. Some private companies have taken initiative in planting Jatropha and setting up bio-diesel production facilities. Southern Online BioTechnologies, a Hyderabad-based company is setting up 10,000 tons per year bio-diesel project in Chautupal, Nalgonda district, Andhra Pradesh. The UK-based diesel manufacturing company, D1 Oils, will be investing US$ 2 million in India for setting up a 8,000 ton per annum capacity refinery at Chennai, which is likely to be commissioned by 2007. D1 Oils has formed a joint venture with Mohan Breweries and distilleries and has begun large-scale Jatropha cultivation in Tamil Nadu, Andhra Pradesh and Chattisgarh. The company plans to have five million hectares of land under Jatropha cultivation and to produce 2.7 metric tons of oil per hectare within five years. The method for obtaining oil from Jatropha through trans-esterification process has been developed and there is need to setup a pilot plant for production of biofuels. The expertise available with US counterparts would be utilized to strengthen this activity for obtaining bio fuels from non edible oils and for setting up of power generation plants using part of the 700 million tonnes biomass available. 3.4 Collaboration Models There is a scope for increased cross border interaction between India and US with increasing levels of interaction as complex collaboration models emerge. Collaboration models could range from 1. Setting up a Joint Venture between participating companies driven by factors like expected business volumes and Indian manufacturing advantages 2. A simple agreement between two parties for certain research initiative or a contract services agreement 3. An agreement to co-develop certain molecules/ seeds through a licensing model, where participating companies could enter different licensing models 4. Financing of innovative business models tapping into a relatively niche space of high value research. On a broader level, most of the partnerships can be clubbed under two broad sections, viz., milestone based (project based) partnership and long-term continuing. Given below is a generic collaborative model which would render itself to customization based on the exact nature of particular partnership. The term Joint Venture is used very broadly in this model and this model does not purely cover financial partnerships.

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Long term collaborations

Indian Partner Joint Venture

Objective

Monitoring of Collaboration

Contract Renewal

Intermediate Decision Points Modify / continue with contract

Final Decision Point

Contract Extension Split as per profit sharing agreement

US Partner

Milestones Responsibilities Profit Sharing

Result oriented collaborations

Negative results / Dispute between partners etc. at any stage

Premature termination of contract

Source : YES BANK Research Public Private Partnerships as a Strategic Tool Private Sector Participation It is our strong belief that Public Private Partnerships (PPP) can be one of the strategic tools for harnessing the potential between India and US. Successful Agri-infrastructure projects can be implemented with the active participation of knowledge banks and the financial community in structuring and financing quality projects in the sector. Indian and US players can participate in Agri-infrastructure projects through various models of Public Private Partnerships. We give below an overview of the PPP process as is used successfully to develop commercially viable Agri-infrastructure projects. Governments all over the world and in India have changed their approach for the development of infrastructure and other projects. The present approach is to invite private sector participation to leverage public sector funds and resources. A wide variety of Private Sector Participation Options are available to the government for the development of infrastructure and other projects through Public-Private Partnerships. Various such options are presented in the following table. These Public-Private Partnerships are usually classified in the roles, responsibilities and risks assumed by parties involved viz. the private sector participant and the government agency.

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Option Service Contract Management Contract Lease Concession Build Operate Transfer Divestiture

Asset ownership Public Public Public Public Private and then public Private or private and public

Operations Capital Commercial Duration and investment risk maintenance Public and private Private Private Private Private Public Public Public Private Private Public Public Shared Private Private 1-2 years 3-5 years 8-15 years 25-30 years 20-30 years Indefinite (may be limited by license)

Private

Private

Private

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