The agriculture and commerce ministries are working out a comprehensive overseas direct investment (ODI) policy.
While it will be a guiding policy for all ODIs, including steel and oil sectors, officials said emphasis is on agriculture due to the food security programme. Agriculture also assumes significance following interest shown by African countries during the recent visit of the prime minister to Africa, added officials.
Currently there is no ODI policy, and private and public sector undertakings are administered under the jurisdiction of individual ministries and the Foreign Exchange Management Act (FEMA) of the Reserve Bank of India.
Focus on agriculture is based on the recommendation of the prime ministers’ working group on allowing ODI in agriculture, but in a way that the produce is exported back to India. Sources said it is difficult to ensure any business enterprise is bound to repatriate the produce to India if that does not make business sense.
This is where the government's role is significant in channalising agents who can get into contract farming or lease lands to private parties, sources said.
The initiative is likely to push production of crops like pulses and oil seeds where India is deficient.
“The food securities on account of these items need to be fulfilled first in India and then we can sell it elsewhere for commercial profit,” explained an official.
To this effect, the department of agriculture is laying special focus on Africa and South America for buying or leasing lands and has started holding discussions with the respective embassies. The department is in the process of preparing a discussion paper dealing with various aspects of the policy.
“Primarily, the government has to be the nodal authority and give fund support if the produce needs to be brought back to India. It is yet to be decided whether the government could set up a revolving fund or play the role of facilitator in a public private partnership (PPP) mode to boost the initiative,” the official said.
Another aspect will be the items to be grown under the government initiative and more significantly, whether India will compulsorily buy them back, or will there be an option to exercise the right to buy depending on the domestic output and requirement in that particular commodity,” said another official source close to the development.
“We are discussing the ground realities and getting feedbacks from different embassies in the African and South American region. We need to ascertain the legal status and support that a country could provide us in this venture,” he said.
