New Delhi
Investments in agri-tech start-ups significantly grew in four years to nearly Rs 6,600 crore till 2020 on the back of explosive growth potential for companies that address inefficiencies across the agri value chain, according to a report.
Indian agriculture has faced some challenges in the past. However, the sector is entering a new phase where technology and accurate information can systematically address those challenges to a great extent, it said.
The report, titled ‘Innovation in India’s Rural Economy: Disruptive Business Models are Stimulating Inclusive Growth in Agriculture and Rural Finance’ from Bain & Company and Confederation of Indian Industry (CII), indicates to this transformation along with the initiatives that can help radically transform Indian agriculture over the next few years.
These initiatives are expanding the participation and role of farmer producer organisations (FPOs) in the rural value chain, expanding post-harvest infrastructure, access to robust data sources for real-time data and decision making and building trust with farmers and making this transformation a cooperative one, it said.
The report also observed that in the past decade, India’s rural ecosystem has evolved significantly with multiple enablers priming this space for future growth.
“These trends have created an environment ripe for innovation allowing start-ups and traditional players to introduce disruptive business models that address inefficiencies particularly in India’s agriculture and finance sectors,” it said.
According to the report, significant domestic and international investments are being pumped into the sector to improve efficiency and access to credit.
“Private-equity investments in the agri-tech space have skyrocketed in the last four years, growing at more than 50 per cent per annum to aggregate approximately Rs 6,600 crore till 2020,” it said.
Investors have focused on opportunities that address systemic issues, building sustainable systems and ensuring inclusive growth. Several global tech giants see this space as a new growth opportunity and are investing in innovative solutions for crop health monitoring and yield estimation, it added.
Parijat Jain, partner and leader of Bain’s agribusiness practice in India, said: “Disruption in India’s food and agriculture will evolve from traditional agriculture to new farming models, advanced agri-tech services, and new food products.”
Jain added that in the past six years, several start-ups have emerged to reduce systemic inefficiencies among inputs and marketplaces, precision farming, processing and storage.
As newer generations of farmers and FPOs become digitally savvy, new business models are emerging across the agriculture value chain, from inputs and harvesting to processing and distribution. Information and transparency initiatives are addressing existing inefficiencies and formalising a traditionally informal sector, the report said.
Tarun Sawhney, chairman of CII Rural & District Economy Council, said: “India’s rural economy is poised for future growth enabled by rural digitisation, affordable technological access, financial inclusion initiatives, FPO and FPC community empowerment, improved infrastructure and access, increased investor focus, and a surge of tech start-ups in the space.”
According to Bain-CII estimates, about 30 per cent of the rural ecosystem is adopting digital payment and digital commerce solutions to avail easier access to agri-financial services.
Accelerated by the pandemic, Unified Payments Interface (UPI) transactions doubled in the past year processing eight times more transaction value today than credit cards.
Multiple other factors have fuelled the swift uptick, including access to smartphones, lower cost of data, and Aadhaar building a digital identity that enabled services like Know Your Customer (KYC) and e-sign. Access to banking facilities has also increased, it added.
