Factors Driving The Growth Of Agritech Industry In India

 Factors Driving The Growth Of Agritech Industry In India

AgriTech is the concept of applying modern technologies to the agricultural sector with a view of enhancing and producing with efficiency and generating sufficient revenue to support livelihoods. AgriTech promises to help farmers increase crop yields, improve animal health, reduce waste, lower carbon footprints and improve scalability by easing the burden of labor-intensive tasks.

Indian Agritech industry is growing at a rate of 25% /yearly and factors are  increase digitization, initiatives by Govt and huge interest of investors. More than 60% population has their dependency on agriculture in one or another way so huge opportunity is for entrepreneurs seeking this sector a business playground, investors who are seeking good exits in years to come and employments which will be created by the new startups entrepreneurs.   

Driving force for giving agritech a strong wing is leveraging technology such as data digitization, data analytics, machine learning, AI, Raas, Saas, efforts are to make the industry more efficient.

Sentiments are good in this sector after Covid, especially in terms of investments. Huge money flow is coming from financial institutions.  As a rough estimate is USD 350 million inflow has been done post covid, and expect to increase by end of this year around USD 1.5 billion resulting in a great opportunity in Agri sector.

A brief summary about factors influencing the growth factors:

Ø  Government initiatives & Reforms supporting the Agtech Sector

Ø  Challenges Faced by the Industry in India

Ø  Startups and why so interaction & interest.  

 

Government initiatives & Reforms supporting the Agtech Sector

The way developments are going on in agri sector after the Farm reforms done by Govt of India just after March 2020, Government is acknowledging the importance and accordingly providing the required support through various schemes and initiatives.  Huge credit goes to Prime Minister Narendra Modi cabinet for giving a shape to Farm Acts and reforms. The Modi Government has been dynamically making policies to improve farmers’ lives in India. In fact, the government has promised its citizens to double the incomes of farmers by the end of 2022.

Growth has been accelerated based on following big launces by the Modi Government.

         I.         I. Agri-Udaan initiative: focuses on catalyzing scale-up stage food and Agribusiness startups through rigorous mentoring industry networking and investor pitching.

       II.            INR 5000 crore grant based scheme by NABARD for digitisation of  35000+ primary Agriculture Credit Societies – PACS by Financial year 2022-23.

     III.            Multilingual App which provides farm inputs and machinery & equipment on rent.

    IV.            Transport and marketing assistance (TMA) scheme to provide financial assistance for transport and marketing of agriculture products to boost agri exports.

      V.            Pradhan Mantri Krishi Sinchayee Yojana (PMKSY), PMKSY focuses on conserving water and increasing irrigation coverage in a focused manner with targeted objectives of source creation, distribution, management, field application, and extension activities.

    VI.            National Centre for Management of Agricultural Extension (MANAGE) in Hyderabad.

   VII.            Establishment of National Agriculture Market (eNAM), a pan-India electronic online trading portal which networks the existing APMC mandis to create a unified national market for agricultural commodities, providing better price through the transparent auction process.

Challenges faced by the Industry

Like other industries, Indian agri industry is also facing various challenges. Agriculture is the bone of Indian economy but due to lack of Govt willpower, nothing much could be done by the previous Governments. Polarisation of interest of farmers has been done by the political parties for their will and win strategy, a big factor remains unchanged just taking farmers mere a vote bank.  This has nothing contributed but only giving a different thought plowed by various political parties.  But if we drive to the business directions and impact on farmers there are various challenges still the industry is facing:

1.

 1.    Lack of financial services

2.       Limited Digital infra

3.       Issue in market linkage which further lead to malpractices,

4.       Unorganised marketing systems where no clarity on govt. policies and benefits.

5.       Non availability of quality agri inputs and products.

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 Major Startups in Agritech Sector

 

Few Startups have shown the courage to build a strong ecosystem for better transparency and scalability through super technology tools.  As per a rough estimate 450 startups are working in the Indian Agri sector.

AgriTech Startups or established old companies work on products, services or applications derived from agriculture that improve various processes. Technology and data can open new opportunities and help solve problems with production, traceability, and the preservation of natural resources

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Categorisation of the startup based on their ecosystem is done as per below ( https://www.ibef.org/blogs/agritech-start-ups-the-ray-of-hope-in-indian-agriculture)

Upstream marketplace model – Agrostar, BigHaat, Agrevolution, Agronxt, Ninjacart, Agrihub and FarmGuru are the main players employing this model

Downstream ‘farm-to-fork’ supply chain model – Krishi Star, Crofarm, Sabziwala and BharatBazar are start-ups working towards increasing efficiencies using this mechanism

Farming-as-a-service model – Far Mart, EM3 Agri Services, RAVGO and Oxen are players offering farm equipment rentals to ease the burden of capital investments for farmers

IoT or Big Data-led innovation model – FlyBird, Cropin, Gro4, Freshokart and Exabit Systems are deploying smart technology to assist farmers gain access to timely information and drive productivity

Engineering led-innovation model – Kheyti, Drip, Kamal Kisan and Nanopix are players driving innovative solutions in this space

Agritech startups are the need of the nation right now. More and more entrepreneurs are setting up companies in this field, grabbing the opportunity to transform the sector. The government policies are also giving thrust to these startups so that they can easily find investors. The farmers can finally look forward to better price realization now and embrace this new initiative.

In 2020, more than 20 agritech start-ups have cumulatively raised more than Rs. 920 crore (US$ 125 million) across equity, venture debt and conventional debt rounds. Some of the notable equity rounds are listed in the table below: https://www.ibef.org/blogs/agritech-start-ups-the-ray-of-hope-in-indian-agriculture

Startup	Model	Funding Till Date (US$ million)	Latest Round	Key Investors
Arya Collateral	Warehousing and Supply Chain	9.3	Pre-Series B	LGT, Aspada, Omnivore
Bijak	B2B Marketplace	14.6	Series A	RTP, Omidyar, Better Capital, Surge, Omnivore
Clover	Warehousing and Supply Chain	6.9	Series A	Accel, Omnivore, Mayfield
Crofarm	B2B E-commerce	4.9	Seed	Smile group
DeHaat	Full Stack	16.5	Series A	Sequoia, FMO, Pi
Ergos	Warehousing and Supply Chain	6.3	Series A	Aavishkaar Capital
IntelloLabs	Image recognition (Agronomy)	8.8	Series A	Saama, Nexus, SVG
Jai Kisan	Full Stack	6	Seed	Arkam, Blume, Better Capital
Kisan Network	B2B Marketplace	3.5	Series A	Misteltoe, YC, Foundersclub, Thiel Foundation
Procol	SaaS – Cloud based procurement software	4.8	Series A	Surge, Blume, Beenext
Vegrow	Big Data & Farmer Analytics	2.5	Seed	Matrix Partners, Ankur Capital, Titan Capital
WayCool	E-Distributor (B2B)	65.7	Series C	Lightbox, FMO, Aspada

 

Cropin Technology well articulated the solution: https://www.cropin.com/segments/

• ·  Farming Companies: Revolutionary technology for Contract Farming Companies, OrganicFarming Companies, Export and Pack House Processing Companies, Commodity Traders
• ·       Seed Production Companies: Cutting-edge technology for Growers and Sellers of seeds
• ·       Agri Input Companies: Breakthrough technology for Producers and Sellers of agri inputs: fertilizers, nutrients, pesticides, seeds and farming equipment
• ·  Financial Lending Institutions: Risk Mitigating technology for Banking & Financial Institutions offering agriculture loans
• ·    Crop Insurance Provider: Risk Minimizing technology for Insurance companies offering agriculture insurance
• ·   Government & Advisories: Innovative Technology for Government and Development agencies involved in agriculture projects on rural development and livelihood, e.g. projects under Government of India’s NFSM & NRLP schemes

Future of Agritech in India is bright  not because of the funding scenario being pushed but because of the need and a solution to the problems faced by the industry. Opportunity is huge in Indian Agri Sector, by 2025 Agritech industry will have USD 25 billion sizes in terms of trade being done by the new tech-based startups. 

 

Written and consolidated by

Balwant Singh Rana

17.07.2021 Jaipur, India