The Rise of Agri-tech in India
India is referred to as a global agricultural powerhouse owing to its vast argo-ecological diversity. The agriculture industry in India contributes significantly to the country's economy, accounting for approximately 16 per cent of the GDP and employing 44 per cent of the national workforce. India is among the fifteen leading exporters of agricultural products in the world. Ernst & Young Report estimates that agri-tech startups in India offer an opportunity of $ 24 billion, and the industry is still significantly untapped (with 1.5 per cent penetration). The Government of India has been working towards a holistic approach to sustainable development and has prioritised the Agri-tech sector. The government is actively encouraging all stakeholders in the sector to incorporate digitalisation to increase their yield and efficiency while reducing their dependency on unpredictable factors like climate and socio-economic uncertainties. The rural micro-finance industry went from INR 1.22 trillion in December 2019 to INR 1.46 trillion in March 2021. This has led the private equity investment in agri-tech businesses to increase by 50 percent, totaling INR 66 billion. The Digital Agriculture Mission (DAM) initiative was launched in September 2021 to help agri-tech start-ups by leveraging advances in cloud computing, earth observation, remote sensing, data, and AI/ML models. This assisted the industry in unlocking new opportunities and addressing the current issues in agriculture, which can significantly increase food production and profitability for all participants while lowering operating costs.
Agri-tech brings new changes and innovation to existing agricultural practices with the help of digitalisation and modern techniques. National Agricultural Market (e-AM) scheme offers free software as well as financial support of INR75 lakh each to the Agriculture Produce Market Committee (APMC) mandi for associated hardware, such as quality-assuring tools and the establishment of infrastructure for cleaning, grading, sorting, packing, composting, etc. The government has also incentivised drones and artificial intelligence for advanced farming activities. To make drone services available to farmers on a rental basis, financial assistance at 40 per cent up to a maximum of INR. 4.00 lakhs are provided for the purchase of drones by Custom Hiring Centers under Cooperative Society of Farmers, Farmer Producer Organisations and Rural entrepreneurs. The use of drones and AI in agriculture helps in creating agricultural yield prediction models that track the health of soil and crops. Further, the government’s effort towards digitalisation in agriculture and in building the digital public infrastructure aids inclusive farmer-centric solutions.
The government's vision for the Indian economy is to create a technology-driven and knowledge-based economy. The Government of India has been increasingly adapting to the ongoing innovations and changes in the agricultural sector to keep up with the pace at which the sector is developing globally. The agri-tech industry is one of the most important pillars to build a sustainable future due to its high demand in India and the global market. The Economic Survey of India 2022-23 highlighted that India’s agriculture sector has grown 4.6 per cent over the last six years with over 1000 agri-tech start-ups having emerged in the sector. Infrastructural development plays a key role in building a robust agri-tech sector. Agriculture Infrastructure Fund (AIF) as a part of the nation’s agriculture fund, has supported more than 18,321 projects totaling INR 13,681 crore. In addition, 8,076 warehouses, 2,788 primary processing units, 1,860 custom hiring centres, 937 sorting and grading projects, 696 cold store projects, 163 assaying projects, and approximately 3613 other post-harvest management initiatives and community farming assets, and cold storage projects were established under the fund. Finance Minister Nirmala Sitharaman said, “The Fund will aim at bringing innovative and affordable solutions for challenges faced by farmers. It will also bring in modern technologies to transform agricultural practices and increase productivity and profitability”.
The digitalisation of agriculture and the launch of an Agriculture Accelerator Fund will usher in new opportunities for businesses and individuals in the country and for the global community at large. India offers huge scope for investment in the agri-tech sector, for AgriTech start-ups, digital infrastructure aids, and innovative technologies.
This blog has been co-authored by Ishita Sirsikar and Ritam Dutta.