has always been a key part of India’s growth story, with the country ranking among the top 3 in terms of agri output.
As a significant agrarian economy, agriculture employs more than half of the country’s population.
According to the ministry of statistics, the agriculture sector’s contribution to GDP has risen from 17.6% in 2018-19 to over 20% in 2020-21. This indicates that the sector can still play a key role in achieving the Government’s vision of building a $5 trillion economy by FY25, with increasing investments in the sector.
Despite agriculture’s key role in bolstering the country’s GDP and offering employment, fundamental challenges in the sector remain, and it is still fraught with business risks such as bad weather, pest, and insect attacks, and market price fluctuations. Significant efficiency gaps, and multiple productivity losses in the agri-value chains over time due to persistent structural and operational challenges, have resulted in the sectors declining share in the country’s GDP.
By decreasing human errors and providing a deeply integrated digital framework for operational management, technology can assist offset these productivity and profitability losses in food value chains and reduce agrarian stress.
Factors such as the availability of mobile phones and high-speed internet connections have accelerated the adoption of technology on farmland. However, accessibility and affordability of high-end technology remain key issues for several farmers. Hence, AgriTech firms can play a key role in addressing these issues while driving investments in the sector.
According to a PwC report, India stands third after the U.S. and China in terms of AgTech funding. Also, according to industry estimates and a recent PWC report, start-ups in Indian AgTech are likely to receive a record $1 billion this fiscal, taking total investments to $2.5 billion since 2012 with a further $10 billion expected in the next decade.
With India’s digital ecosystem witnessing healthy tailwinds through affordability and availability of high-speed internet and maturing digital content, it presents exciting opportunities for innovation in agriculture with the leveraging of next-generation technologies such as AI, ML, IoT, and Software as a Service (SaaS). The Government is also using this window of opportunity as evidenced by its proactive initiatives on conceptualizing a national agri stack and developing a regulatory framework for the use of drones in agriculture.
The AgTech sector is abuzz with the increasing flow of growth capital into start-ups that play across the value chain from market linkage to financing, to precision farming, to mechanization services. This fast-growing start-up ecosystem is bringing new business models that seek to address several legacy challenges in the industry.
But what will it take for start-ups to translate buzz and big valuations into the meaningful on-ground impact that materially contributes to doubling farmer income?