AgriTech Landscape in India

India is recognised as a global agricultural powerhouse because of its great argo-ecological diversity. India's agriculture business contributes significantly to the country's economy, accounting for roughly 18% of GDP and employing 45% of the national workforce (Redseer Strategy Consultants). According to the Press Bureau of India (PIB), India ranks 8th with a share of 2.33% among the world's top agricultural exporters. According to an Ernst & Young report, agritech firms in India present a US$ 24 billion opportunity, although the market is still largely untapped (with only 1.5% penetration).

When fully developed, the agritech ecosystem has the potential to increase the incomes of Indian farmers by 25 to 35% and contribute US$ 95 billion to the country's GDP through lower input costs, increased productivity and price realisation, more affordable finance, additional sources of income (NITI Aayog). Between 2020 and 2027, the global agritech industry is expected to grow at a compound annual growth rate (CAGR) of 12.1% (Ernst & Young report). Due to its huge demand in India and the global market, the agritech industry is one of the most crucial pillars for constructing a sustainable future. According to the Economic Survey of India 2022-23, India's agriculture sector has increased by 4.6% during the last six years, with over 1300+ agritech start-ups emerging in the sector. Infrastructural development is critical to the establishment of a viable agritech sector. The Indian government has prioritised the agritech industry and is aiming towards a comprehensive strategy for sustainable development. The government is relentlessly encouraging all players in the sector to adopt digitalisation in order to boost yield and efficiency while decreasing reliance on unavoidable variables such as climatic and socioeconomic uncertainties.

Overview of the AgriTech Sector in India

Agriculture is anticipated to contribute roughly US$ 600 billion to India's GDP by 2030, a 50% increase over its contribution in 2020 (McKinsey and Company). The agribusiness ecosystem includes all business operations from farm to fork, encompassing the complete value chain, from agricultural input supply to agricultural product manufacture and transformation, and distribution to final customers. This ecosystem has developed to include categories such as e-commerce and hyperlocal, driven by causes such as rapid urbanisation, diet diversity, changing consumer preferences, and the expansion of food markets. The future of Agritech in India is expanding, with innovations ranging from core enterprises in the value chain adopting digital technologies such as "super apps" to start-ups, or "Agri fintechs" and huge technology companies. With less than 1% of the market, India has a US$ 24 billion agritech sector opportunity (Niti Aayog). The states of Karnataka and Maharashtra and the Delhi National Capital Region (NCR) are major hubs for Agri-startups in India. However, it remains mainly unorganised and fragmented, with numerous tiers of intermediaries and middlemen present across the agriculture value chain.

With a vast underlying agriculture market size of US$ 493 billion and a current tech penetration of barely 0.8%, the growth potential is enormous (according to Redseer Strategy Consultants). As per data from an Avendus report, trading and auction systems are expected to transact approximately US$ 8 billion in produce. Farm gate warehousing intends to manage more than US$ 10 billion in agri-commodities. Agri fintech is predicted to expedite loan disbursements worth more than US$ 3 billion, while quality evaluation is estimated to cover a GMV of US$ 5 billion in produce.

The market size of agritech is expected to more than double from 2022 to 2027, rising from US$ 4 billion to a whopping US$ 34 billion (Avendus report). The food crop segment alone is predicted to rise from US$ 3 billion to US$ 25 billion by 2027. Fibre crops, cattle and dairy, poultry, and aquaculture are all expected to grow significantly.

Source: Avendus

• Firms, including banks and nonbanks, primarily engaged in providing finance through farm and rural loans, are utilising technology to better understand the farmer, deliver targeted products, and decrease loan risks. For example, the State Bank of India (SBI) created the YONO Krishi app to address farmers' financial, input, and advising needs.
• Companies that sell farm equipment have begun to provide mechanisation as a service to farmers. For instance, Mahindra provides tractor rental services.
• Firms involved in the acquisition, processing, or sale of agricultural products have begun to integrate backwards into the supply chain and establish market linkages for farmers. Over the last 20 years, ITC, a core outputs player, has used its e-Choupal network to enhance direct-from-farm buying. It has now released the ITCMAARS super app. Using a collaborative approach, the app provides farmers access to modern technologies, high-quality inputs at reasonable rates, and financing.
• Physical and digital infrastructure are equally vital in rural India. (McKinsey and Company) Although 75 to 80% of farmer households have access to a smartphone, the majority still prefer physical touchpoints for digital support such as training or app installation assistance. Agritechs like Agrostar and DeHaat have field teams that make on-the-ground visits and lead campaigns to increase app usage.

Business models in India’s Agritech sector

The technology landscape of Indian agriculture

• Drones

Unmanned aerial vehicles (UAVs) (or drones) have the potential to significantly alter agriculture and bring about a variety of improvements. Drones can be used for a variety of tasks, including aerial planting, pesticide application, and remote data collection for research.

• Biotechnology

Biotechnology has enabled the development of crops with increased yields, resistance to pests and diseases, and drought tolerance. As a result, crop productivity has increased, crop loss has decreased, and crop quality has improved.

• Food processing and preservation

Food processing and preservation procedures that are safer and have a longer shelf life have been developed because of technological advancements. As a result, food waste is reduced, and harvests may be transported and stored more efficiently.

• Market Access

Farmers now have better access to both domestic and international markets due to technology. Using technology and e-commerce, farmers can connect with clients and sell their commodities directly, eliminating intermediaries and enhancing earnings.

• Agri-startups

Agritech start-ups can substantially contribute to agricultural reforms by integrating cutting-edge technology and new farming methods. Agritech startups can contribute to agricultural revolutions by improving farming practises, raising production, expanding capital accessibility, etc.

• Precision agriculture

Drones, sensors, and GPS are some of the technologies used to monitor crops, soil, and weather. As a result, farmers can make data-driven decisions and better manage resources like water and fertiliser.

• Farm machinery

Mechanisation has played an essential role in enhancing agricultural productivity. Tractors, harvesters, and seed drills are just a few examples of cutting-edge agricultural equipment that has assisted farmers in becoming more productive while spending less on manpower.

Role of Technologies in Agritech

Artificial intelligence, machine learning, and blockchain are helping to improve agricultural and food production and sustainable development by reducing production waste, lowering carbon footprints, and raising agricultural output.

 1.Artificial Intelligence

• Quality control: AI-powered cameras and sensors are automating data traceability, real-time quality monitoring, and crop inspection in order to help minimise waste and improve, monitor, and control the quality of food from farm to fork.
• Supply chain management: AI has the ability to improve supply chain efficiency by facilitating trustworthy transactions, boosting data transparency, reducing the risk of product spoilage, and optimising logistics and transportation.
• Automation: Using AI-powered robots and drones to automate labour-intensive processes like harvesting and cutting can enhance efficiency and save costs.
• Predictive Maintenance: Applications of artificial intelligence have helped to reduce downtime, increase shelf life, and anticipate post-harvest mechanical repairs.
• Predictive modelling: By predicting agricultural yields, identifying disease outbreaks, and figuring out the best time to harvest, artificial intelligence (AI) can assist farmers in streamlining their operations and improving harvests.

2.Regenerative Agriculture

• Soil Health: Regenerative agriculture focuses on improving soil health and its ability to absorb nutrients and water, which can lead to improved crop yields and increased resistance to environmental stressors such as drought.
• Reduced use of synthetic chemicals: This kind of modern farming serves to increase the quality and safety of the produced items, minimise the negative impacts of the soil on the environment, and improve the overall health of the soil by encouraging the use of natural inputs like compost, mulch, and cover crops while using fewer synthetic chemicals.

3.Internet of Things

The application of Internet of Things (IoT) devices in agriculture is focused on the accurate measurement and monitoring of data such as soil health, food chemical and physical composition, equipment efficiency, supplier analytics, and climatic conditions. One of the biggest uses of the Internet of Things, which is revolutionising agritech, is precision agriculture. IoT-enabled equipment like sensors, drones, and cameras can collect data on variables such as soil moisture, temperature, and nutrient levels, as well as crop growth and health.

4.Blockchain Technology

The dynamics of agri commerce will continue to be strengthened by blockchain, a revolutionary technology that just upended global food chains, given the growing demand for traceability, data management, food safety, and supply chain transparency in the global food ecosystem. From ensuring the accuracy of data to certifying the origins of produce and recording transactions, blockchain has the ability to change Agri trade while maintaining food safety and quality standards. The technology is predicted to grow rapidly as a result of a number of industry leaders using smart agriculture strategies.

Funding in Agritech Landscape in India

Funding in the agritech sector has been steadily increasing, reflecting the growing interest and confidence in this area. Despite the financing winter and macro headwinds, the agritech sector attracted over US$ 2.4 billion in funding across 133 deals in 2022, compared with US$ 1.3 million in funding across 143 deals in 2019 (Omnivore).

 Source: Omnivore

Government Initiatives

• Easier digital reach through farmer collectivization

The government has supported farmer-producer organisations (FPOs), funding US$ 750 million over the next five years to establish over 10,000 FPOs. FPOs unite the otherwise dispersed farmer base, allowing agritech firms (such as Samunnati) to readily access and scale up their business models.

• Development of the “Agri stack”

India is developing a centralised database of agricultural data sets that will be linked to farmers based on their land holdings. This will allow agritech companies to tailor their offerings and products to farmers' specific demands, which vary depending on land size, crop type, and soil conditions.

• Digital soil health cards

A digital soil-health-card programme comprises mapping soil composition and quality at the farmer level. It could help agritech businesses in India in promoting initiatives for precision farming initiatives and customising their products for particular farmer groups.

• Digitally enabled direct benefit transfer in fertilizer sales

This scheme provides direct subsidies to farmers for fertiliser and other items. It validates the farmer's identity at points of sale and through verification. It has the potential to greatly increase fertiliser uptake while also reducing leakages in transportation, hence ensuring affordability for smallholder farmers.

• National Agriculture Market (eNAM)

By linking existing Agriculture Produce Market Committee (APMC) mandis, this pan-Indian electronic online trading site creates a unified national market for agricultural commodities that guarantees better pricing for farmers through a transparent auction process.

• Agricultural Accelerator Fund and digital public infrastructure

The government has established a new fund to promote the agritech ecosystem, potentially spawning new start-ups that would improve digital usage and the breadth of digital solutions available to farmers. Furthermore, the government announced its intention to establish an open-source digital public infrastructure that will most likely provide agritechs with important information services along the value chain.

Road Ahead

According to India Briefing, as the world's population approaches 7.9 billion in November 2022 and is expected to reach 9.8 billion by 2050, food security has emerged as a major worldwide concern. The urgency for action must also address resource scarcity, distribution and access distortions, and the need to expand agricultural yields. Policymakers around the world are now looking for long-term solutions to the dilemma by leveraging technology in agricultural practices.

While 86% of India's small and marginal farmers continue to be the principal sources of food and nutrition, they face challenges such as extremely small landholdings of less than two hectares and restricted access to technology, inputs, financing, money, and markets. To keep up with the rate at which the agricultural sector is evolving globally, the Government of India has been increasingly adjusting to continuing innovations and developments. The digitalization of agriculture and the introduction of an Agriculture Accelerator Fund will open new opportunities for the country's enterprises and individuals, as well as the global community at large. India has enormous potential for investment and growth in the agritech sector, including Agritech start-ups, digital infrastructure assistance, and cutting-edge technology.