Agro-industries are given high priority in India particularly because of their great potential
for contributing to development. The emphasis on village-based agro-industries was
introduced almost a century ago in India by Mahatma Gandhi as an important ideology and
corner-stone of the independence movement. The approach has undergone substantial
transformation since then, but major challenges to its success in development remain: how to
organize sustained production and procurement from large numbers of small farmers, how to
ensure adoption of the right technology and practices to generate quantity and quality output
at a reasonable cost, how to obtain capital for ensuring good processing technology and
meeting the high working capital requirements in a fluctuating business, how to deliver
strong marketing efforts to compete and open nascent markets, and how to ensure effective
ownership, management and control to ensure performance for its main stakeholders of
producers, consumers and investors. To address these challenges, effective institutional
frameworks are a must, and a number of innovations and institutional models have emerged
in India. These include the HPMC model, the AMUL model, the Pepsi model, the E-choupal
model, the Nestle model, the Heritage model, the Suguna model, the Reliance model and
more. The paper uses available literature and data to examine the performance of several of
these models with respect to the above mentioned challenges. Many findings and lessons
emerge which would be useful for business and for guiding supportive policies and practices
in developing countries.