Year Of Big Stakes For the Agritech Sector In India
The year 2022 is undoubtedly set to be a transformative experience for the agriculture sector, with increased investments, emergence of new business models, cross-border expansion, better regulatory structures and job creation
Agriculture in India supports over 40 per cent of the workforce and contributes nearly $20 billion to the national GDP. However, the sector is bridled with persistent legacy issues that are embedded deeply across all levels in pre- and post-harvest systems. This ultimately impacts the livelihoods of the people who are part of the agri-food value chains.
Increasing global populations, rising food security concerns and climate stresses across the world has highlighted the vulnerability in the agricultural sector. These issues can be addressed with targeted tech-interventions, however, it is necessary to bring large scale tech-adoption in agricultural and allied sectors by creating awareness, building market specific solutions and optimizing trade with organized marketing. This is not an easy task, especially considering that the agriculture sector also carries the brunt of tech-agnostic belief systems. However, agritech companies, particularly startups, are rising to this challenge and helping to slowly but surely transform the face of agriculture.
Presently, there are over 1,000 agritech startups in the country, however, agritech market potential in India is estimated to be over $24 billion. Some reports estimate that presently, agritech penetration in the country is less than 1 per cent. Considering the diversity of India's agricultural ecosystems, this presents a massive opportunity for existing agritech startups to scale, as well as for new players to enter the market.
Agritech is a sunrise sector, with positive growth projections and rising interest from the investor community, both domestically and internationally. Some reports estimate that the agritech sector is poised to grow into a $30-35 billion market by 2025. India ranks third in agritech funding, right after the US and China, which has picked up pace in the last few years. Some agricultural experts have asserted that the agritech sector is poised to receive funding worth $1 billion this fiscal year. However, changing dynamics in global agriculture, international food trade and geopolitical tensions can impact the growth of the Indian agritech sector.
With the recent funding crunch being witnessed by the startup ecosystem, positive market projections will need to be corrected by factoring in the volatile market conditions. As market sentiments deteriorate, this will also impact the investment in-flow and overall growth of the sector. However, I believe that agritech will be one of the few sectors that will be able to attract healthy interest from the investor community in 2022. With food security being an essential concern for nations across the globe and increased demand for tech-interventions to improve efficiencies, the agritech sector will come out stronger and more resilient to external shocks. It is possible that we will also start to witness degrees of consolidations this year, as the Indian agritech sector enters its third phase.
Agritech companies that are working at the forefront of agricultural 4.0 have witnessed increased demand for their products, services and solutions. Though agribusinesses are more likely to modernize their processes by adopting tech-solutions, recently there has been a surge in interest and demand from the farmer community too. The agritech sector has successfully proven that by harnessing the power of technology, it is possible to bring significant returns, simplify existing processes and remove malpractices from the system. The government is also creating policy structures and frameworks to support agritech entrepreneurs and encourage entry of new players into the market.
Beyond the domestic borders, there is also a growing interest from the international community for the unique tech-solutions being built by Indian agritech companies. Countries are increasingly looking for innovations that can address their food security concerns both in the short and long-term, as well as in a sustainable way. This opens up opportunities for Indian agritech companies to scale their geographical footprint. I expect that we will witness increased global expansion of Indian agritech startups this year, beyond the borders of APAC regions.
This naturally means that the agritech sector needs to attract and retain talent across core business as well as support functions to hold up its rapid growth. Not only is the agritech sector offering abundant employment opportunities, but it is also fostering a thriving and diverse entrepreneurial ecosystem, which will witness further expansion this year. I believe that agritech will be one of the few sectors that will be actively hiring people as we all brace ourselves to face tough times ahead.
The year 2022 is undoubtedly set to be a transformative experience for the agriculture sector, where the agritech sector will play a major role. We will witness increased investments, emergence of new business models, cross-border expansion, better regulatory structures and job creation in the agritech sector.