Virendra Pandit
New Delhi: Despite the problems being faced by the first generation of reforms currently attempted in Indian agriculture, investors are flocking to the sunshine sector of agricultural technology-related startups, sensing a huge potential for growth.
These startups will put money back into the farmers’ hands, experts said on Tuesday.
Their keen interest in Agri startups was reflected in the doubling of investments to the tune of USD 500 million in a single year (2020), while the world economies were reeling under severe stress due to the coronavirus-triggered lockdowns.
The way the first generation of reforms in industries were opposed by many in the 1990s, the farmers are also opposing the current set of innovations initiated by the three recently-passed farming laws. For more than 70-days, they are protesting, unaware of the profits they would earn, apparently due to a lack of understanding of the underlying structural issues involved in the reorganization of the sector.
Currently, India has more than 600 Agri startups attempting to solve challenges in the Agri value chain. But it accounts for merely 1 percent of the potential market opportunity of USD 24 billion (nearly Rs.17,500 crore). This indicates the potential for Agri startups in the country, according to a FICCI-PwC report on Tuesday.
The report shows that despite the pandemic, investors pumped more than USD 500 million into agri-tech deals in 2020, as compared to USD 248 million the year before.
With a significant rise in investment activity and considering the market potential of agri-tech in India, experts estimate more than USD 10 billion (Rs.7,300 crore) investments in the next 10 years.
The report was launched at the third edition of the two-day “FICCI Summit & Awards for Innovations by Agri Startups” which commenced today (February 9, 2021).
The Summit provides a platform to Agri startups to showcase their projects implemented on a range of issues impacting Indian agriculture and the allied sectors. The event will showcase how to fuel the future growth of Agri startups in India, impactful partnerships for the development of a relevant ecosystem, policy push, and enabling farmers. PwC is the knowledge partner for the event, according to a release.
At the inaugural session of the summit, TR Kesavan, Chair of FICCI National Agriculture Committee, highlighted that agri startups come up with brilliant ideas but face issues in expansion and need a proper system to expand in India. It is time to unleash their potential in this space as they are going to put the money back in farmers’ hands, he said.
The 36-page report also cited a five-point agenda to further enable the government to bolster the agri startup ecosystem. It emphasized that it will need impetus in key strategic areas such as infrastructural enablement, product innovation, supporting entrepreneurship and incubation, enhanced co-creations, and institutional support.
These five points are:
- Pacing development of an AgriStack: A nationwide single and unified digital Agri database infrastructure could act as a one-stop solution and enabler for data requirements in the startup ecosystem. This, along with better data infrastructure, mobile literacy, and high-speed internet in rural India, will alleviate the infrastructure bottlenecks.
- Ushering in entrepreneurship and incubation: Ecosystem-level support in the form of agribusiness incubation centers, right mentorship, and a mix of technological and managerial assistance would help agritech startups leapfrog in their business.
- Co-creating through collaborations: There is a need to foster a win-win collaborative partnership between startups, farmer producer organizations, and micro, small, and medium enterprises to optimize profitability across value chains and ensure improved price realization for small and marginal farmers.
- Product innovation: Agri startups need to collaborate and engage actively with banking and insurance companies and introduce crop and region-based credit and insurance products (agri-fintech solutions) in such a manner that small and marginal farmers get encouraged to readily adopt climate-resilient solutions. Agri startups can also innovate and customize tech solutions for quality assaying, traceability, and food safety. Product innovation strategies can be executed successfully through continuous engagement between startups and the government, and other facilitators in the ecosystem, and,
- Institutional support: To ensure requisite institutional support for Agri startups, there is also a need for creating a dedicated Agri startup cell at a decentralized level to meet the requisite regulatory and ease of doing business requirements for startups.
Ashok Dalwai, CEO of National Rainfed Area Authority under the Ministry of Agriculture and Farmers Welfare, stressed the need to re-mandate agriculture as a domain that is productive and can generate employment.