Government considers FDI liberalisation in plantation sector, banana may be included

Mumbai: The government is considering liberalising foreign direct investment norms in the plantation sector by bringing more commercial crops, including banana, under the policy, a government official said on September 6.

The Commerce and Industry Ministry is holding consultations with stakeholders on expanding FDI liberalisation in the plantation sector.

An official said the government is looking at allowing greater foreign investment in additional plantation activities, specifically mentioning banana as a potential inclusion.

Currently, 100% FDI through the automatic route is permitted in tea, including tea plantations, as well as coffee, rubber, cardamom, palm and olive oil tree plantations.

FDI is currently not permitted in other plantation sectors or activities.

India seeks to expand banana exports

The proposed policy change could be significant for India's banana industry. India is the world's largest banana producer, with annual production estimated at more than 30 million tonnes.

Despite its large production base, India's share of the global banana export market remains relatively small. The country accounts for around 26.45% of global banana production, while its share of global banana exports is about 1%.

India exported bananas worth $377.5 million in 2024-25, representing approximately 30% year-on-year growth. The government is targeting banana exports of $1 billion in the coming years.

Indian bananas are currently exported to markets including Iran, Iraq, the UAE, Oman, Uzbekistan, Saudi Arabia, Nepal, Qatar, Kuwait, Bahrain, Afghanistan and the Maldives.

The US, Russia, Japan, Germany, China, the Netherlands, the UK and France have also been identified as markets with significant export potential.

FDI and plantation investment

India received $295.23 million in FDI in tea and coffee-related activities between April 2000 and March 2026, while FDI in rubber goods stood at $3.93 billion during the same period.

The government is now examining whether extending FDI access to additional plantation crops could help attract investment, improve supply chains and strengthen India's export capabilities.

Andhra Pradesh leads banana production

Andhra Pradesh is India's largest banana-producing state, followed by Maharashtra, Karnataka, Tamil Nadu and Uttar Pradesh.

Together, these five states accounted for around 67% of India's banana production in 2022-23, highlighting the concentration of the country's banana industry in key agricultural regions.

The proposed FDI liberalisation comes as India seeks to convert its strong agricultural production base into higher-value exports. Banana is a notable example: despite India's dominant position in global production, its share of international exports remains comparatively low.

Allowing FDI in additional plantation activities could potentially bring more capital and investment into production, post-harvest infrastructure, processing, storage and export-linked supply chains. However, the government is still consulting stakeholders, so the scope and timing of any policy change have not yet been finalised.