The government is considering expanding the scope of foreign direct investment (FDI) in plantations by opening up more sectors for foreign investors as it seeks to leverage free trade agreements (FTAs) to bring global technology, better planting material and modern farm practices into high-value agriculture, a senior government official said.
Currently, 100% FDI is allowed in the tea sector including tea, coffee, rubber, cardamom, palm oil tree, and olive oil tree plantations. The expansion of this basket is also being undertaken in line with the aim to enter more agri product categories where global trade is high, he said.
India’s agriculture exports stood at $ 53 billion in 2025-26 and the target is to take it to $ 100 billion by 2030. The sectors that would be driving the growth would be outside of core food commodities that are subject to frequent regulatory action to manage the local supply. The Horticulture sector and processed foods would be the government’s focus in this drive.
Leveraging FTAs
In India-New Zealand Free Trade Agreement (FTA) that comes into force in October, there is a provision where New Zealand will run a focussed action plans for kiwifruit, apples, and honey to improve productivity, quality, and sectoral capabilities of these fruits’ growers in India.
The cooperation includes the establishment of Centres of Excellence, improved planting material, capacity building for growers, collaborative research, technical support for orchard management, post-harvest practices, supply chains and food safety.
Apple is the second most traded fruit globally and New Zealand with production up to seven times that of India at 60 tonnes per hectare a major player. At the top is banana of the traded fruits is banana and it is one of the sectors the government is looking at to open up for FDI.
Though India is the top banana producer, its exports were $ 377.5 million in 2024-25. The government’s target is to take it to $ 1 billion and for which protocols are being developed to get the highly perishable fruit to overseas markets by sea just in time for retail sale.
The biggest exporter of Banana is Ecuador with exports of $3.53 billion followed by the Philippines at $1.23 billion and Columbia again at $1.23 billion. Due to geography West Asia and other countries in South Asia remain the biggest market for India.
Despite 100% FDI route being available foreign investors have stayed away from core plantation activity. All FDI is concentrated in processing and warehousing. Between April 2000 and March 2026 only $ 239.23 million has entered the sector. For 2025-26 this figure was $ 10.84 million.
According to experts, FDI has stayed away from owning plantations because of land and tenancy issues, long gestation periods, ageing plantations, fragmented holdings and weak downstream integration that leads to India exporting raw and semi-processed commodities.
Rather than encouraging foreign companies simply to buy or establish plantations, India could offer stronger incentives for companies that bring technology, processing capacity, global distribution networks and R&D, they say.