Agriculture accounts for about 18% India’s GDP and provides employment to around 58% of the population. India’s agricultural sector faces several challenges including low productivity, fragmented landholdings, limited access to technology, and inadequate market infrastructure. This has led to low profitability for farmers and a lack of interest among young entrepreneurs.
As a result of the emergence of agritech startups, agriculture in India has undergone a dramatic change in recent years. These startups provide innovative solutions to precision farming, farm management, supply chain management, and agri-finance. To address the challenges faced by agriculture and to improve the farmers’ livelihoods, agricultural startups rely on technology, innovation, financial support, training, and entrepreneurial spirit.
According to a recent report by Nasscom, the Indian agri-tech market is expected to reach $24.1 billion by 2025 at a CAGR of 25%. A growing number of startups are focusing on leveraging technologies such as artificial intelligence, the Internet of Things, and blockchain in the agriculture sector in order to transform it. Agri startups have also been recognised as having great potential by the Indian government, and several initiatives have been launched to assist them in achieving their goals.
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The Startup India initiative
The government established the Startup India programme in 2016 to provide a conducive environment for startups in India and offer funding, mentorship, and other resources. As of 2022, approximately 19,000 startups had been recognized by the department for promotion of industry and internal trade (DPIIT). There has been a rapid growth in the startup economy in India since 2016 with businesses sprouting up throughout the country (See graphic). Aatmanirbhar Bharat Abhiyan, launched in 2020, promotes self-reliance and entrepreneurship in India, especially in agriculture and allied sectors.
The emergence of startups is a promising trend that has the potential to transform the agriculture sector and enhance farmers’ livelihoods. The agritech startups ecosystem in India is poised to grow significantly in the near future as a result of increasing investment, government support, and technological advancements.
Challenges faced by farmers
Indian farmers face a number of challenges that hinder their productivity and income. The following are some of the major challenges farmers in India face:
Low productivity: One of the most significant challenges faced by farmers in India is low productivity. There are still many farmers who use inefficient, traditional farming practices that do not produce high yields. Moreover, this problem is further exacerbated by the lack of access to modern farming techniques, quality seeds, fertilizers, poor agricultural and advisory services and pesticides. Moreover, the recent challenges of climate change, droughts, and unseasonal rains further impact agricultural productivity.
Lack of access to technology: Indian farmers face difficulties gaining access to technology that could improve their productivity and efficiency. Agricultural farmers cannot make informed decisions on when and how much to plant, water, and harvest due to a lack of access to technology, such as precision farming techniques, remote sensing, and precision irrigation systems. Yet millions of farmers are far away from using modern agricultural technologies. The recent trends of using tractors, harvesters, and essential irrigation technologies like sprinklers and drip irrigation are somehow helping farmers.
Limited access to market: Farmers in India are also limited in their market access. Small farmers often have difficulty connecting with buyers directly, and middlemen often take a significant portion of their profits, leaving them with little return on investment. In addition to the poor infrastructure, such as inadequate storage facilities and transportation systems, farmers are unable to sell their produce in distant markets, so they are forced to sell locally at a lower price.
Climate change: Climate change has become a significant challenge for farmers in India, affecting crop yields and making it difficult for farmers to plan for their future. Erratic weather patterns, such as unseasonal rainfall or drought, make it challenging for farmers to decide when to plant, irrigate, and harvest their crops.
Debt burden: Many farmers in India are in debt, often as a result of borrowing money in order to invest in their farms. Due to high-interest rates and limited access to affordable credit options, farmers are often unable to repay their loans, resulting in an ongoing debt cycle.
Farmers in India face a number of challenges, including low productivity, limited access to technology and markets, climate change, and debt. In order to address these issues, a multifaceted approach will be required, including investments in technology, infrastructure, and credit options, as well as efforts to mitigate the impacts of climate change on agriculture.
Role of agritech startups
The importance of agricultural startups in addressing the challenges farmers face in India is increasing. Here are some of the ways they are contributing to the agricultural sector. Startups in the agribusiness sector are developing innovative solutions to improve productivity and efficiency in farming. As a result, they are developing new technologies that assist farmers in making data-driven decisions to maximize their yields, such as precision farming, crop monitoring, and soil analysis tools.
These start-ups are developing innovative tools, and products as well as offering agriculture and advisory services using various online and offline mobile services to the farmers. The government of India`s initiative of advancing mobile service, offering 4G and 5G internet services in rural areas, is immensely helpful for farmers and new entrepreneurs to collect real-time data and offer services directly on agricultural farms.
Access to technology: Many agritech startups are assisting farmers in gaining access to technology that was previously unavailable. To help farmers improve their water management practices and increase crop yields, they are developing affordable irrigation systems, solar-powered pumps, and other tools.
Creating employment opportunities: Agri-startups also generate employment opportunities in rural areas, contributing to the reduction of migration to urban areas. By providing training and support to farmers, they create jobs in logistics, packaging, and marketing and aid in the development of local supply chains that can support smallholder farmers.
Providing farmers with access to the market: Agri-startups are developing innovative marketplaces that connect farmers directly with buyers, eliminating middlemen and increasing farmers’ profits. They are using digital platforms to enable farmers to sell their produce online, allowing them to reach a broader audience and expanding their market reach.
Response to climate change: agricultural start-ups are developing new solutions to assist farmers in adapting to these challenges. Their current research includes the development of new crop varieties that are more resistant to droughts and other extreme weather events as well as new farming practices that can help farmers adapt to changing climate conditions.
Farmers in India face many challenges, and agri-startups play a vital role in addressing those challenges. As a result of their innovative solutions to improve productivity, provide access to technology and markets, and create employment opportunities, they are building a more sustainable and resilient agricultural sector in the country that can sustain the livelihoods of millions of farmers.
Successful agri-startups
The Indian agri-startup industry has experienced a boom in recent years. The following are a few examples of agri-startups in India, their business models, technologies, and impacts:
Ninjacart is an agri-startup based in Bengaluru that connects farmers directly with retailers, hotels, and restaurants. The company uses a technology-driven supply chain to ensure that fresh produce reaches consumers as quickly and efficiently as possible. Ninjacart’s platform enhances farmer income and reduces post-harvest losses. Over 200 million dollars have been invested in the company, and it operates in over 20 cities throughout the country.
Stellapps is an agri-startup based in Chennai that uses IoT and machine learning technologies to improve milk production and supply chain management in the dairy industry. By monitoring cow health, milk quality, and production levels, Stellapps’ platform helps dairy farmers increase milk production by making data-driven decisions. Additionally, the company’s technology assists dairy processors and retailers in managing their inventory and quality control processes more effectively.
Samunnati is an agri-finance startup based in Chennai that provides customized financial products and services to small and marginal farmers. As part of its credit assessment process, the company utilizes a data-driven approach in order to determine farmers’ creditworthiness and provide them with affordable credit options. Over 100,000 farmers have been helped by Samunnati’s model to gain access to credit and increase their income. As a result of its innovative business model, the company has raised over $50 million in funding.
AgroStar is a Pune-based agri-startup that offers farmers access to quality inputs such as seeds, fertilizers, and pesticides, as well as advice through a mobile application. In order to provide farmers with personalized recommendations, the company uses AI and machine learning technologies. This enables them to make informed decisions regarding their crop management practices. Since its inception, AgroStar has assisted more than 1.5 million farmers in improving their crop yields and reducing input costs.
CropIn is an agri-startup based in Bengaluru that offers farmers digital tools to manage their farms more efficiently. The company’s platform assists farmers in tracking crop growth, managing resources, and optimizing yields. In more than 50 countries, CropIn’s technology has helped over 4 million farmers improve their productivity and profitability. As a result of its innovative approach to agriculture, the company has raised over $33 million in funding.
These are some of the few examples of how agritech startups are developing innovative solutions and helping farmers and agribusiness. In addition, many private start-ups developed several mobile apps to connect with farmers provide them with real-time solutions.
Innovative technologies and business models are being used by these successful agri-startups in India to address the farmers’ challenges and improve the agriculture sector’s efficiency and profitability. As a result, they are providing new opportunities for small and marginal farmers, providing them access to markets, financing, and technological resources and helping build and develop rural communities.
Investment and growth
There has been a steady increase in the funding landscape for agri-startups in India, with venture capital firms, impact investors, and government agencies all taking an interest in the sector. Approximately $1.3 billion in investment was attracted to the Indian agri-tech sector between 2013 and 2019. This amount is expected to increase in the future. Additionally, the government has launched a number of initiatives to support agri-startups, such as the Agri Udaan program that provides financial assistance and mentorship to agricultural startups.
Indian agriculture can benefit greatly from the activities of agri-startups. In addition to creating new jobs, these startups are also driving innovation within the agricultural sector and improving the living conditions of small and marginal farmers. By 2025, the Indian agri-tech industry could generate $24 billion in value, with farmers receiving the majority of the benefits.
Currently, India imports a large portion of its food requirements, and the growth of agri-startups could help to increase domestic production and reduce imports. Moreover, the growth of agribusinesses in India can also contribute to the country’s goal of becoming self-sufficient in its food production by reducing its dependence on imports. As a result, agri-startups in India have a lot of potential for investment and growth.
Investors are making significant investments in this sector. With the support of government initiatives, it may be able to generate significant value for the Indian economy and contribute to its growth and development. In addition, the development of agri-startups can contribute to addressing agriculture’s challenges, improving farmers’ livelihoods, and reducing the country’s reliance on imported food.
Policies and key programmes
There have been several policy initiatives taken by the Indian government to support the growth of agri-startups. India has implemented several policies and initiatives that have contributed to the development of agri-startups:
Startup India: The government launched the Startup India initiative in 2016 in an effort to promote entrepreneurship and innovation in the country. As part of this initiative, agri-startups are eligible for a variety of benefits, including tax exemptions, access to funding, and simplified regulations.
Atmanirbhar Bharat Abhiyan: This project was launched in 2020 in order for India to become self-sufficient in several sectors, including agriculture. In this initiative, incentives and support are provided to agribusiness startups that strive to gain self-sufficiency in the agricultural sector.
Pradhan Mantri Fasal Bima Yojana: Pradhan Mantri Fasal Bima Yojana (PMFBY) is a government-sponsored crop insurance program designed to provide financial assistance to farmers in the event of crop failures. Farmers have benefited greatly from the scheme, which provides them with a safety net that allows them to take risks and experiment with new crops and technologies.
National Agriculture Market: The National Agriculture Market (e-NAM) is an online marketplace where farmers can sell their products directly to buyers nationwide. Through the platform, farmers can access new markets, obtain better prices for their produce, and minimize losses post-harvest.
Rashtriya Krishi Vikas Yojana is a government scheme that aims to improve agriculture’s productivity and profitability. As part of the scheme, funding is provided to agri-startups for activities such as research and development, skills development, and infrastructure development.
As a result of these government policies and initiatives, agri-startups have grown rapidly in India. They have created an environment conducive to startups, provided access to funding, and simplified regulatory requirements.
With the government focusing on self-reliance in the agriculture sector, agri-startups have also had an opportunity to innovate and contribute to the growth and development of the sector. These policies and initiatives have enabled agri-startups to address the challenges faced by the agricultural sector, improve farmers’ livelihoods, and contribute to the growth of the Indian economy.
Future outlook
Agri-startups in India have a bright future, with significant growth potential and opportunities. It is, however, important to note that there are also challenges that must be addressed in order to ensure that the industry continues to grow and develop. As an overview of the agri-startup ecosystem in India, the following challenges and opportunities can be identified:
Agri startups face significant challenges with regard to access to finance, despite growing interest in the sector. In this high-risk sector, startups have difficulty accessing traditional sources of financing due to a lack of collateral and the high level of risk involved. Agri-startups continue to face significant challenges due to the lack of adequate infrastructure, such as cold storage facilities and transportation.
As a result, they are unable to store and transport their products efficiently or reach new markets. While farmers are increasingly adopting new technologies in the sector, there are still challenges in getting them to adopt these technologies. In order for farmers to gain a better understanding of the benefits of new technologies, there is a need for more education, training and awareness campaigns.
Food demand is growing in India due to the growing population and rising income levels. As a result, agri-startups have significant opportunities to introduce new products and services to meet this demand. In the agricultural sector, sustainability has become increasingly important, with an increasing number of startups focusing on sustainable agricultural practices.
As a result, startups have the opportunity to develop new solutions that are environmentally friendly and assist in reducing the carbon footprint of agriculture. The Indian government has demonstrated a strong commitment to supporting the growth of agri-startups through various policies and initiatives. As a result, startups are able to innovate and grow in an environment that is supportive of their growth.
To conclude, India’s agri-startup ecosystem has a bright future, with substantial growth prospects. While there are challenges that need to be addressed, the government’s support and the growing demand for food present significant opportunities for startups to innovate and contribute to India’s agricultural development.
References:
Agritech for Agriculture 4.0- Growing More with Less. (n.d.). NASSCOM Community | the Official Community of Indian IT Industry. Retrieved March 13, 2023, from https://community.nasscom.in/communities/agritech/agritech-agriculture-40-growing-more-less
The Rise of AgriTech Ecosystem in 2023. (n.d.). NASSCOM Community | the Official Community of Indian IT Industry. Retrieved March 13, 2023, from https://community.nasscom.in/communities/agritech/rise-agritech-ecosystem-2023
Agricultural Mechanization Picks up Pace. (n.d.). Pib.gov.in. Retrieved March 13, 2023, from https://pib.gov.in/Pressreleaseshare.aspx?PRID=1518097
eNam | Home. (n.d.). Www.enam.gov.in. https://www.enam.gov.in/web/
India: number of recognized startups 2022. (n.d.). Statista. https://www.statista.com/statistics/1155602/india-start-up-recognized-businesses/
(Sunil Madan works with the Michigan State University, USA.)
Dr Badri Narayanan Gopalakrishnan is Lead Adviser and Head, Trade and Commerce, NITI Aayog. Views expressed are personal.