World’s 2nd largest food producer attracts innovators and investors

Investments in Indian agritech firms now account for around 10 per cent of the global investments in this segment. With more than 350 start-ups in agritech, India ranks sixth in this space globally.

September 27, 2019

India has the second largest agricultural landmass in the world – about 140.1 million hectares of net sown area and around 198.4 million hectares of gross cropped area

India is also the world's largest producer of milk, pulses and jute, and the second biggest source of rice, wheat, vegetables, fruits, sugarcane, groundnut and cotton

Funding in agritech startups in India has grown from US$46.1 million in 2017 to US$66.6 million in 2018, this has helped boost innovation and scaling up in the space

AgroStar, Crofarm, Stellapps, CropIn Technology Solutions, Aarav Unmanned Systems, Ugaao, Gramaphone, EM3 AgriServices and NinjaCart are some of India’s agritech startups

India has the second largest agricultural landmass in the world – about 140.1 million hectares of net sown area and 198.4 million hectares of gross cropped area, as per the 2017-18 annual report of the Department of Agriculture. India is also the world’s largest producer of milk, pulses and jute, and the second biggest source of rice, wheat, vegetables, fruits, sugarcane, groundnut and cotton. India leads in the production of spices, marine products, poultry, livestock and plantation crops. With around 20 agro-climatic regions, India has all 15 major climates in the world. The nation also features 46 of the 60 soil types in the world. Such a fertile environment has helped India stay on top, despite little technological intervention, along with the challenges of small land holdings, lack of ideal processing, supply chain and logistics infrastructure, and limited last mile delivery. 

However, over the past few years, globalisation, improvement in investment and affordability, greater awareness of food quality, among other factors, are making it important for the agri industry to enlist technological support, in its way forward. Riding on this shift, the Indian Council for Agricultural Research (ICAR) expects the demand for food grains to rise to 345 million tonnes by 2030, compared with 192 million tonnes in 2000. To achieve this growth, production of food grains needs to increase at the rate of 5.5 million tonnes annually. Add to this, the Government of India has pledged to double farmers’ income by 2022 to alleviate challenges such as low income margins, middlemen, operational hurdles, among others. Herein, technological intervention will go a long way in achieving the targets. This will also help the nation is ensuring food security, a global concern. 

Innovation in the nation’s agriculture sector offers massive opportunities of investment and strong income growth

Innovative agricultural technologies will play a key role in improving farming techniques, quality and yield, reducing farming costs and achieving better revenue for the farmers. Innovation in the nation’s agriculture sector, thus, offers massive opportunities of investment and strong income growth. 

Growing agritech sector in India

Over the past decade, a number of agritech startups have come up in India, to cater to the needs of all those who are engaged, either directly or indirectly, in farming. Domestic and international firms, encouraged by the Government of India’s proactive policies and initiatives, are developing innovative technologies in different segments of the agricultural value chain to harness the sector’s potential. From seed innovation to farming equipment, farmer applications, harvesting, transporting, cold storing, warehousing and retailing services and products, innovators, entrepreneurs and investors have been providing the agri industry with much needed support. There exists scope for a lot more. With the application of the right technology, India can substantially improve its agricultural output, which bodes well for a range of ancillary industries and the food processing sector.

Today, farmers across India are adapting to machines and equipment that use data analytics, Internet of Things (IoT) and robotics for activities such as farm mechanization, data collection, studying plant health and enhancing crop yield. Farmers are also employing data-driven predictive technologies to forecast soil health, climate conditions, adjust water for irrigation, and predict potential produce. Apart from core farming, activities such as grading and packaging that were earlier a manual process, are now software driven. Using digital technologies and smartphones, farmers can now access the latest information and best practices prevalent in other regions. Meanwhile, with the majority of the farming community being non-English literate and living in rural areas, the growing volume of Indic language content on the internet will help farmers access more information.

AgroStar, Crofarm, Stellapps, Bombay Hemp Co, CropIn Technology Solutions, Aarav Unmanned Systems, Ugaao, Gramaphone, EM3 AgriServices and NinjaCart are just some of the agritech startups across India that have created ripples with their innovative offerings and are drawing strong funding. 

Government focus on agritech

The Government of India has focused on building the nation’s agriculture sector to make the space more profitable for all players as well as to prepare for the needs of the future. Recent schemes launched by the Government to help the farming space include a plan to provide air cargo support to promote agriculture exports from India; allotment of US$306.2 million for digitisation of Primary Agricultural Credit Society (PACS) to ensure cooperatives are benefited through digital technology; a new AGRI-UDAAN programme launched to boost innovation and entrepreneurship in agriculture. 

A Nasscom report titled “Agritech in India – Maxing India Farm Output” has stated that investments in Indian agritech firms now account for 10 per cent of the global investments in this segment. With more than 350 start-ups in agritech, India ranks sixth in this space globally. Agritech startups from India have started to attract strong interest from the investor as well as the innovator communities, worldwide. Investors say, the agriculture sector which is witnessing signs of technology led disruption has the potential to build scalable businesses that can positively impact India’s farming population.