The agritech landscape in India grew from less than 50 start-ups to more than 1,000, fueled by increased farmer awareness, rising internet penetration in rural India, and the need for greater efficiency in the agriculture sector. 3 Moreover, India’s regulatory environment is gradually evolving to facilitate the growth of digital technologies in agriculture.
Lets look forward how agritech is transforming agriculture in India.
India’s agriculture industry is at a crossroads. When India became an independent nation 75 years ago, agriculture was the driver of the economy, contributing more than half of the nation’s GDP. Today, India is still one of the world’s largest and most diversified food producers, and agriculture—the source of more than 20 percent of India’s income—remains a central part of the economy.
But there are significant problems holding back the nation’s untapped potential. If solved, a flourishing agriculture industry could both boost the economy and significantly improve farmer livelihoods and income. By 2030, agriculture could contribute around $600 billion to India’s GDP—an increase of 50 percent over its contribution in 2020. But to get there, India must unlock growth and productivity for the sector.
The key to expanding India’s transformation into a farming powerhouse is agricultural technology, or agritech. India lags behind developed farming nations in agritech.
Agritech in India continues to ramp up—from core companies in the value chain using digital technologies like “super apps” to innovations by start-ups, or “agrifintechs,” and large technology companies.
Fully nurtured, the agritech ecosystem has the potential to propel Indian farmers’ incomes to grow by 25 to 35 percent.
- Existing agriculture incumbents use digital technologies to either go direct to the farmer or to expand products and services across adjacencies. Suppliers are becoming buyers, advisers are adding finance—any combination is possible and happening:
- Providers of farming supplies such as agrochemicals, fertilizers, and seeds are using technology to create direct-to-farmer sales channels that bypass middlemen and retailers. For example, UPL (traditionally a core agrochemicals player) is providing mechanization services and agrochemicals to farmers through its nurture.farm digital platform. The company has also expanded to provide financing, advisory, and market services.
- Firms, including banks and nonbanks, primarily engaged in providing finance through farm and rural loans, are using technology to better understand the farmer, provide targeted products, and reduce loan risks. For example, the State Bank of India (SBI) developed the YONO Krishi app to meet farmers’ finance, inputs, and advisory needs.
- Companies that sell farm equipment have also started providing mechanization as a service to farmers. Mahindra, for example, offers a tractor rental service.
- Firms that operate in procurement, processing, or the selling of agricultural products have started to integrate backward into the supply chain and create market linkages for the farmer. For example, ITC, a core outputs player, used its e-Choupal network to expand direct-from-farm procurement over the past 20 years. It has now launched the ITCMAARS super app. Using a partnership approach, the app gives farmers access to modern tools, quality inputs at the right prices, and finance.
The way forward :-
The investors and agritechs that navigate India’s unique hurdles may see boundless potential. The next three to five years will be critical for incumbents and new players.
It likely won’t become a winner-takes-all market. A few major players, especially those with strong supply chain linkages to the farm, could emerge as dominant players in this space. These companies could support a host of smaller, niche players that will in turn leverage the end-to-end platforms for growth.
Collaboration will be crucial. While agritechs might facilitate better decision making and replace manual farming practices like spraying, reducing dependence on retailers and mandis, incumbents remain important in the new ecosystem for R&D and the supply of chemicals and fertilizers.
There are successful platforms already emerging that offer farmers an umbrella of products and services to address multiple, critical pain points. These one-stop shop agri-ecosystems are also creating a physical backbone/supply chain—which makes it easier for incumbents and start-ups to access the fragmented farmer base.
Agritechs have a unique opportunity to become ideal partners for companies seeking market access. In this scenario, existing agriculture companies are creating value for the farmer by having more efficient and cost-effective access to the farmer versus traditional manpower-intensive setups. It’s a system that builds the more agritechs know the farmer, the better products they can develop.
India’s farms have been putting food on the table for India and the world for decades. Digital technologies could enhance production at every step, from high-quality agriculture inputs to world-class agriculture outputs. This could help create sustainable growth for the Indian farmer, boost economic fortunes in rural areas in a flourishing ecosystem, and benefit the entire economy.
