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India Inc set to go green

The Govt will permit the formation of land-share companies and encourage contract and corporate farming, reports Chetan Chauhan.

business Updated: May 28, 2007 03:17 IST

Corporate India may soon play a bigger role in agriculture. The government intends to make this possible by allowing the formation of land-share companies and permitting contract farming and corporate farming.



On Tuesday, Prime Minister Manmohan Singh will discuss these and other proposals with state chief ministers at a meeting of the National Development Council.



One proposal calls for allowing a group of farmers to become shareholders of a company in proportion to the land they own. The shares will be transferable among farmers but cannot be traded among non-farmers to avoid corporate takeovers.



Agro-processing companies will, however, be allowed to own up to 25 per cent equity in the company. The proposal states, "A farmer thus can doubly benefit from farming and share in agro-processing unit."



The government also wants to bring a comprehensive law to increase the participation of companies in the farming sector. The model bill suggests that adequate provisions should be made in state Agriculture Produce Marketing Committee (APMC) Acts to allow companies to buy produce at a predetermined price from farmers. The advantage for farmers? They will get technical inputs and better seeds from industry.



Another proposal is an attempt to end the licence regime in the running of fruit and vegetable markets. The committee says, "The option for private investments in agriculture marketing is restricted. Under the APMC Act, only state governments are permitted to set up markets. Further, the licensing of traders in the regulated markets has led to monopoly of the licensed traders, acting as a major entry barrier for a new entrepreneur."



Also on the NDC's agenda will be a plan to allow retail foodgrain ventures like Wal-Mart-Bharati and Reliance easy access to farm produce.



The government expects the private sector to invest about Rs 12,230 crore in agricultural marketing, including setting up warehouses and providing institutional credit to farmers. The committee said the plan was to check the fall in foodgrain production. Wheat production, for example, has fallen by 0.11 per cent since 2001. “The trend can lead to a serious risk to food security of the country in a longer run,” the committee said.