Govt mulls FDI liberalisation in plantation sector
The government is examining liberalisation of Foreign Direct Investment (FDI) norms in the plantation sector to bring more commercial crops, including bananas, under the FDI-eligible list.
Stakeholder consultations led by the Commerce and Industry Ministry are currently underway on the proposed policy change.
The move is aimed at attracting capital, technology and modern post-harvest infrastructure to scale up banana cultivation and processing for export markets.
The government has set an ambitious target of pushing banana export value toward $1 billion in the coming years, up sharply from current levels.
FDI Policy Framework for Agriculture and Plantations
India's FDI policy is issued by the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry, through the annually consolidated FDI Policy Circular, and operationalised under the Foreign Exchange Management Act (FEMA), 1999. Agriculture and plantations are treated as a restricted sector: FDI is generally prohibited in farming/plantation activities except for specific carve-outs, reflecting concerns over land ownership by foreign entities and smallholder livelihoods.
Key Details
- Currently, 100% FDI is permitted under the automatic route only in: tea plantations (including tea processing), coffee, rubber, cardamom, palm oil tree, and olive oil tree plantations.
- FDI is not allowed in any other plantation crop or activity — floriculture, horticulture, seed development, animal husbandry, pisciculture and vegetable cultivation are separately permitted under 100% automatic route as distinct categories, but general "plantation" crops like banana currently fall outside the FDI-eligible list.
- Automatic route means no prior government/RBI approval is needed, only post-facto reporting.
- Sectors excluded from FDI altogether include agriculture (other than the specified exceptions) and plantation activities other than the six listed above.
The proposal under discussion would expand this exceptions list to include banana and possibly other commercial crops, which currently cannot legally receive FDI even though India is the world's largest producer.
India's Banana Economy and Export Competitiveness
India is the world's largest producer of bananas, at over 30 million tonnes annually, yet holds only about a 1% share of global banana export trade — a classic case of a production giant with weak export competitiveness, often tested via agri-trade paradoxes (similar to India's position in milk, wheat, or rice production vs. exports of some commodities).
Key Details
- India's banana exports were valued at approximately $377.5 million in 2024-25, a year-on-year growth of about 30%.
- Low export share is attributed to fragmented landholding, inadequate cold-chain and ripening infrastructure, quality/phytosanitary certification gaps, and limited scale of commercial cultivation compared to competitors like Ecuador and the Philippines.
- APEDA (Agricultural and Processed Food Products Export Development Authority), under the Ministry of Commerce, is the nodal body promoting agri-export infrastructure and market access for horticultural produce including bananas.
FDI liberalisation is being framed as a lever to close this production-to-export gap by bringing in capital for scientific cultivation, packhouses, and cold-chain logistics needed to meet international quality standards.
- India: world's largest banana producer, over 30 million tonnes/year; ~1% share of global banana exports.
- Banana export value: ~$377.5 million in 2024-25 (up ~30% YoY); government target: push toward $1 billion.
- Current FDI-eligible plantation crops (100% automatic route): tea, coffee, rubber, cardamom, palm oil tree, olive oil tree plantations.
- FDI policy is administered by DPIIT (Ministry of Commerce and Industry) under FEMA, 1999.