India has always been, and continues to be a primarily agrarian economy, boasting a population of 140 Mn farmers. In fact, agriculture and allied sectors like fisheries and forestry combined, contributed ~18% to the GDP (Gross Domestic Product) as of 2020, providing livelihood for close to 60% of India’s population. However, to better meet consumer demands, improve the effectiveness, efficiency, and sustainability of existing policies and programs, design better ones, and achieve resiliency — India is fast moving towards digitalization which involves the implementation of advanced digital technologies such as Data Analytics, Blockchain, Artificial Intelligence (AI), Machine Learning (ML), Internet of Things (IOT), and more. Thus born, at the confluence of traditional agricultural methods and modern technologies, is Agritech.
In an attempt to understand the nation’s Agritech landscape, Zinnov studied India’s agricultural ecosystem with the objective of gaining better perspectives on the nation’s technology focus, initiatives, start-up outlook, challenges faced so far, and government policies.
India’s digital ecosystem is witnessing healthy tailwinds such as affordability and availability of high-speed internet, a maturing digital content ecosystem. What this has brought in its wake is an exciting opportunity for innovation in the agricultural ecosystem, where market players can make best use of next generation technology such as data digitalization and data platforms, data analytics, AI, ML, IoT, and Software as a Service (SaaS) to their advantage.
An average Indian farmer makes about USD 100 each month, with over 50% of farmers being in heavy debt – worth USD 700 or more per head. As the farms are small and fragmented, they lead to lower yields when weighed against the global benchmarks. Adding to this dispiriting scenario, farmers in India hardly earns about 8-10% of their products’ final value – compare this with 30% or upwards realization in more developed markets. Losses are incurred due to improper logistics, and an estimated 5.3 Bn tonne of soil is degraded due to incorrect implementation of fertilization methods. Moreover, only ~60% of these small and marginal farmers have access to institutional credits.
So how is Agritech addressing such sticky challenges?
India, being ranked the 3rd largest start-up hub globally currently houses more than 500 Agritech start-ups. These homegrown start-ups have been identifying gaps and mending broken bridges across the traditional agriculture value chain.
Zinnov’s latest report, categorizes Indian Agritech start-ups into 5 major categories based on who they serve and what problems they address, while making the value chain more profitable.
While it is true that start-ups have identified pain points in the market and bred innovative solutions to maximize the produce, as well as profitability for all parties involved – these firms may still face challenges that are indigenous to the nation owing to its complex ecosystem.
Here are a few key challenges –
Agritech is a rapidly evolving industry in India having experienced a 9x growth in institutional investment in the past 5 years amassing USD 530 Mn as of 2020. Business and technology initiatives, accelerator programs, public-private partnerships, High Tech penetration which includes the integration of advanced technologies such as AI,ML, IOT, Data Analytics, and Blockchain, to name a few, have digitally transformed the next wave of Agritech start-ups. Though the ecosystem possesses a few critical sticky challenges, it is clear that the Indian agriculture sector has abundant potential for technological progress with such real-time advancements happening in the industry and local start-ups turning out to be real gamechangers in their arenas.
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