India considers opening banana plantations and other commercial crops to more FDI

Government reviews plantation investment rules

India is considering liberalising foreign direct investment rules for plantation agriculture by extending access to additional commercial crops, including bananas. Mathrubhumi reported that the Commerce and Industry Ministry is consulting stakeholders, but the scope and timing of any policy change have not been finalised.

Under the current framework, 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. Foreign direct investment is not permitted in other plantation sectors or activities. Adding bananas would therefore represent a material expansion of the eligible agricultural categories.

The review is intended to determine whether foreign capital could strengthen production, post-harvest infrastructure, processing, storage and export-linked supply chains. These areas are particularly important for a perishable product whose commercial value depends on consistent quality, careful handling and timely access to overseas markets.

Large production base, limited export share

India produces more bananas than any other country, with annual output estimated at over 30 million tonnes. It accounts for around 26.45% of global banana production, according to Mathrubhumi, but holds only about 1% of the global banana export market. That gap places export infrastructure and market access, rather than primary production alone, at the centre of the policy discussion.

Indian banana exports reached $377.5 million in 2024-25, approximately 30% more than a year earlier. The government aims to raise the value to $1 billion in the coming years. Achieving that target would require expansion beyond existing destinations as well as investment in the systems connecting farms with ports and foreign buyers.

Current markets include 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 been identified as markets with significant potential. Access to these destinations may depend on buyers' quality requirements and the capacity of Indian suppliers to deliver standardised fruit reliably.

Investment would affect concentrated producing regions

Andhra Pradesh is India's largest banana-producing state, followed by Maharashtra, Karnataka, Tamil Nadu and Uttar Pradesh. Together, the five states represented around 67% of national banana production in 2022-23. Any new plantation investment and associated infrastructure could consequently be concentrated in these established growing regions.

India received $295.23 million in FDI in tea and coffee-related activities between April 2000 and March 2026, while FDI in rubber goods reached $3.93 billion over the same period, Mathrubhumi reported. These figures provide context for the capital already entering permitted plantation-related segments, but do not indicate how much investment bananas might attract. Until consultations are completed and formal rules are issued, the proposal remains a policy option rather than an approved opening.