India has been an agriculture-based economy for ages. The sector contributes around 20% to the country’s overall Gross Domestic Product (GDP) and employs about 60% of the population. So it’s needless to say that agriculture and its allied sectors are essential to the country and its economy.
Any business created by the agricultural sector directly or indirectly comes under the agro based industry. Hence, the agro based sector is very vital to the Indian economy.
In this article, we’re going to look at what agro based industries are, what products come under them, the different types of agro based industries, their importance and finally, how one can start a business in the agro based sector.
What is Agro Based Industries
Industries with their base and raw material from agricultural products are known as Agro based industries. Agro based industries process, cultivate, or manufacture products either for the intermediary or final markets. For example, the intermediary market could be making yarn out of cotton to make the final product of textile or cloth. The final product market could be milk from the cattle used for direct human consumption.
The agro based industries range from fruits, vegetables and grains that are grown by the farmers in the field to secondary products of agriculture such as sugar that is made from sugar cane, vegetable or sunflower oil made from agricultural produce, leather that is made from cattle, the paper that is made from the trees and so on.
Examples of Agro Based Industries in India
Since agricultural activities have seeped at the grassroots levels all over India, agro based industries are seen in every town, every city and state in different forms of businesses and industries. The wide array of agro based industries includes sugar, oil, textile, and leather. However, the most significant agro based sector is the food sector and the products manufactured via agricultural activities.
Some of the prominent types of agro based industries in India are:
The textile industry is the biggest agro based industry in India. Everything comes under the textile industry, from collecting the raw material for the textile to making yarns, dying the yarns, making the cloth, and eventually the final product, garments or other textile material. Because of the vast supply chain of this industry, it is one of the most significant contributors to the agro based industry.
The use of sugar goes above and beyond just for food. Its by-products are used to produce chemicals and even for alcohol components. To say that the sugar industry is one of the highest contributors to the GDP is an understatement.
India is a large production house of sugarcane because of the favourable weather conditions. As a result, it is the second-largest producer and exporter of sugar globally. Because of this, the sugar industry is one of the significant contributors to the import-export sector of the country.
Vegetable Oil Industry
India produces 5% of the world’s vegetable oil. It is also one of the largest consumers of edible oils globally. With the demand for vegetable oil just increasing over the years, India is one of the few countries that can match the demand and ensure the vegetable oil sector in India is doing well.
India, specifically the northeast, has favourable conditions to grow tea. Because of this, India is a significant producer of tea and a very big exporter of tea. Growing and cultivating tea is a skill that a few local Indians have understood, giving us an edge over the rest of the world. The tea production ranges right from the everyday chai to green tea, jasmine tea and chamomile tea. This increases employment and diversification in the tea industry.
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Importance of Agro based industries in India
- The agro based industries employ individuals and help carry forward the family business.
- They help increase and enhance the productivity of industrial production
- Allow the rural parts of India to shine and make an economy for themselves
- Ensure the development of the rural parts of India through diversification
- Diversify the industries apart from agriculture
- Improve the standard of living for overall individuals throughout India
- Increase our import-export production, making Indian products globally available
Lately, the contribution from agriculture and the other sectors have reduced to lesser demand.
Nonetheless, the Indian government is boosting the agro based industries in India. The government is introducing reforms and concessions in many agro based sectors to increase participation and ensure these industries are carried forward. This way we are not only enhancing the working population of the country but also ensuring that agriculture and agro based industries are a great contributor to the GDP and the Import-Export of the country.
How to start a Agro Based Industries?
While it is not extremely easy to start a business in this sector, nor is it difficult or impossible to start a business either. With the right amount of research, business knowledge and understanding of the market, you will get your business up and running. Some of the few things to keep in mind to start a business in the agro based industry are:
- Market Research
Understand what products are already available in the market, how the market is responding to those products. Are there any products missing from the market that you can fill a gap and what is the new factor you can include in your product? Always do a fair amount of market research before you decide to start a business or a product.
- Business Plan
You need a business plan once you have finished the market research and decided on the agro product. First, you need to figure out if you will be buying the land to conduct the business or renting it out. Next, where will you secure your raw materials, and who will your suppliers be? Apart from that, you also need to make a one year, 3-year and 5-year financial projection and understand when your business will profit. All of these components are part of the business plan.
- Capital, Registration and Final arrangements
The final step in the process is to find the sources of capital. Is it going to be a loan or are you looking for investors or from the family business? Once you have the money arranged, you can go into the final steps of registering the business, making business cards, a website and putting the word out. The final arrangements need to be done on a test run, having a few employees on board and ensuring everything else is in place, such as the legal requirements and law, are in place. You are then good to kick off your business.
Of course, this is a very basic and nuanced way to start a business in the agro based industry, but it is a good kick-off to get the ball rolling.
The agro based industry in India is thriving and full of hope. With the increase in startups and vocal for local products, individuals can start a business in the agro based sector with support in some way or the other. Given the favourable weather conditions in India for agricultural purposes, we should make the most of it and create businesses that revolve around agro based industries for our growth and development.
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