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Agro export zones fail to get private support

New Delhi, Sep 1 (IANS) India's promising agro industry has failed to attract enough private sector participation with hardly any of the 60 proposed agri export zones (AEZs) attracting minimal flow of funds, says Minister of State for Commerce Jairam Ramesh.

Friday, September 1, 2006 | 9:43:12 AM IST (+05:30 GMT)
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New Delhi, Sep 1 (IANS) India's promising agro industry has failed to attract enough private sector participation with hardly any of the 60 proposed agri export zones (AEZs) attracting minimal flow of funds, says Minister of State for Commerce Jairam Ramesh.

The state-run Agricultural and Processed Food Products Exports Development Authority (APEDA) has with the help of state governments demarcated 60 AEZs in the last four years to promote horticulture produce.

With private investment they are planned to offer infrastructure support like cold storage, sorting, packaging and logistics.

The zones have been created depending on the strength of a region in growing fruits and vegetables like gherkins, pineapples, vanilla, rose-onions, mangoes and grapes as well as flowers.

'On paper there are 60 AEZs but hardly has any taken off due to lack of adequate private sector participation. Without getting private sector participation these efforts cannot take off,' Ramesh told IANS.

The commerce ministry is actively wooing private investment by showcasing the opportunities in the agro sector, especially in exports, he said.

'We have asked APEDA to identify 10 or 12 AEZs that show most potential so that we can kickstart their operations using the around Rs.500 million earmarked this year by the commerce ministry for promoting exports,' he said.

'Our objective is to promote more value addition and double agro exports in the next five to seven years,' said Ramesh.

The commerce ministry has allocated the funds under the Assistance to States for Developing Export Infrastructure and Allied Activities (ASIDE) scheme to bridge critical gaps in facilities, official sources said.

The ministry is hoping to get the APEDA report in the next few days on zones showing the best potential for becoming a success.

'Around 15-20 AEZs have shown some credibility going by the export performance and investments,' said APEDA Chairman K.S. Money.

'The investment flow from the private sector has, however, not been in keeping with the projections. As against a projection of Rs.150 billion these AEZs were expected to attract in the last four years, we have so far got around Rs.8 billion investment flow.'

The government is offering private investors several incentives like subsidies, to make investment in agro industries more attractive. However, some private players have now started setting up their own agro business hubs.

In terms of exports, some of the more active AEZs have helped to raise India's agro exports by over Rs.50 billion over the last few years as against the target of Rs.100-110 billion.

India is one of the largest producers of vegetables and fruits, exporting around $10 million worth of fresh and processed produce annually.

However, agri exports have slumped from 18 percent of the total export basket in the 1990s to 10 percent presently.

Among the more active AEZs are on gherkin and rose-onion in Karnataka, mango in Chittor district of Andhra Pradesh, grapes and grape wines as well as mangoes in Maharashtra and floriculture in Tamil Nadu, while West Bengal is witnessing good investment flow in processing of pineapples, mangoes and vegetables, an APEDA study shows.

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