Farming 3.0: What Are the Growth Prospects and Opportunities For India's $24.1 Billion Agritech Sector?
With more than 450 startups, India's agritech market is continuing to grow at a breakneck pace even amid the pandemic
It’s a well-known fact that India is a predominantly agrarian economy with more than half of the country’s population depending on agriculture as the primary source of livelihood. While agriculture contributes over 20 per cent to India’s GDP, the sector has been relatively slow in the adoption of technology and digitization as opposed to other industries such as finance, education, etc. However, over the past few years, the emergence of agritech startups has revolutionized the sector with increased digitization and incorporation of cutting-edge technology.
With more than 450 startups, India’s agritech market is valued at a whopping $24.1 billion and is continuing to grow at a breakneck pace even amid the pandemic. In fact, in 2020, agritech startups witnessed over $300 million in investments, and the industry has been projected to grow at a CAGR of 32 per cent from FY20 to FY25. Agritech is one of the few sectors that has seen increased activity despite the pandemic in terms of new companies and investments. Besides, regulatory changes have also made it possible for several opportunities and growth prospects to emerge. Let’s take a look.
Supply-side growth factors
From the supply side, with agritech players on a mission to empower farmers’ lives through the incorporation of technology-driven business solutions, the opportunities are aplenty. First and foremost, regulatory easing has been a major driver of growth as farmers no longer need to depend on intermediaries and can gain direct access to the market.
Furthermore, as mentioned earlier, the entry of agritech startups in the market has marked a new era for agriculture that will take the industry to greater heights. This is simply because agritech startups have been instrumental in empowering farmers with new-age tools and access to financial assistance.
Apart from helping farmers choose the right products to increase their crop yield and improve their market linkages, these tools will also contribute to educating the farmers and boosting their income, and allow them to earn more from their existing landholding. And with the growing number of agritech companies in the industry, there will also be the availability of multiple modes of operation, making it more streamlined and efficient.
Demand side growth factors
While there may have been changes in the eating/consumption habits of consumers over the years, one thing is for certain: food never goes out of business. In fact, the change in eating habits and increasing per capita income has only led to a wider bouquet of food requirements in the domestic market. Additionally, recent times have also seen a significant surge in agri exports and there is a growing demand for high quality and more traceable food both in the domestic and export markets. This is primarily due to today’s consumers becoming more health conscious – the result being a radical shift in preferences with the consumption of fruits and vegetables skyrocketing. So, they prefer to know the source and origin of what’s on their plate/kitchen and are constantly on the lookout for organic produce. Now for the million-dollar question – what is the scope that has been foreseen in the agritech market in the upcoming years?
What opportunities are in store?
Undoubtedly, technology has been the major contributor to the agritech sector’s growth. Given the skyrocketing technology adoption in the sector, we will soon be witnessing the use of tech platforms to manage every aspect of transaction in the agriculture value chain – right from sourcing of the right inputs to improve soil quality and crop yield to accessing larger markets.
Moreover, with technologies such as AI, agritech players can determine the issues farms face and resolve them while also deploying deep tech solutions in the post-harvest phase for quality management. However, the deployment of technology isn’t just limited to AI. Agritech companies are introducing advanced tech such as blockchain to drive traceability and AR/VR into various aspects of agriculture while also leveraging satellite data to devise the right solutions for farmers depending on the issues in their farm, thereby allowing them to make more informed decisions.
Since payments and monetary assistance also play a pivotal role in streamlining the end-to-end operations and these features have only recently been introduced in the sector, there is a huge scope for credit assessment of farmers and other ecosystem players by utilizing new sets of data garnered.
With a sharp focus on innovation, tech-driven processes, quality, safety, traceability, and sustainability, agritech players are transforming the industry and empowering stakeholders as well as consumers, allowing them to make informed choices. Given the pace at which the dynamics of the industry are changing with abundant opportunities and scope for growth, we will soon be witnessing a large-scale revolution that will shape the future of agriculture.