In its truest form, agriculture is the backbone of India’s economy, providing livelihoods to more than half of the country’s population. The sector proudly contributes about 17% of India’s GDP and is the primary source of food for the country’s growing population. This segment, however, is plagued with numerous challenges—unorganized markets, poor market linkages, low productivity, small landholdings, a lack of access to financial services, and so on—that prevent it from achieving its full potential.
A combination of large markets and deep problems is often the breeding ground for new opportunities. Over the last decade, many Agritech startups have leveraged technology and data to address key challenges faced by Indian agriculture. Today, there are 1000+ startups that have cumulatively raised $3B+ in funding and are estimated to drive $4B+ in GMV which is likely to grow eight times in the next 5 years.
“Indian agritech sector to address $34 billion market by 2027”
Policymakers everywhere are now seeking sustainable methods to leverage technology in agricultural practices to alleviate this crisis. It has catapulted the attention given to emerging agriculture technology (agritech), with startups raising $26.1 billion in funds in 2020 worldwide. This was a 35.4% growth over 2019. In fact, the global agritech market is projected to grow at a compound annual growth rate (CAGR) of 12.1% between 2020-27. India, too, is competing in this segment alongside China and the US.
Developments in agritech are hugely relevant to India’s economy. Its agriculture sector, which is worth $370 billion, it continues to remain the main source of livelihood for over 40% of the population and contributes 19.9% (FY 2021) to the national GDP. However, despite the sector’s contribution, it remains mired in structural weaknesses that inhibit growth and productivity. In order to address these challenges and improve farmers’ incomes, Indian agriculture needs technology-aided modernization backed by resilient reforms; this is where agritech is expected to play a significant role.
India currently has over 1300 agriculture startups that are actively employing artificial intelligence (AI), machine learning (ML), the Internet of Things (IoT), etc. to increase efficiency and productivity in the sector. The COVID pandemic has now put them on an upward growth trajectory. The states of Karnataka and Maharashtra and the Delhi National Capital Region (NCR) are major hubs for agri-startups in India.
Indian agricultural sector broadly comprises farming (crops and horticulture), forestry, livestock (milk, eggs, meat), and fisheries. Ranking second after China, it accounts for 11.9% of the global agriculture gross value added (GVA) of $3,320.4 billion and contributes 12% to India’s exports. Additionally, the sector also impacts consumption and production dynamics in non-agricultural segments, such as consumer products, retail, chemicals, and e-commerce.
Since 2015, investments in Indian agritech have expanded multifold, with the total investment in 2020 (until October) being $242 million. In 2020, within the agritech industry, the meat delivery segment of startups received the maximum funding of $124 million, followed by startups engaged in marketplaces and e-distribution ($83 million). The trends of 2019 were ruled by the marketplace and e-distribution startups, which received the lion’s share of funding at $203 million out of a total of $257 million, while the meat delivery startups received merely $20 million in funding.
Technologies Shaping the Agriculture Landscape
AI has taken the world by storm, and the agriculture sector isn’t too far behind in adopting what AI has to offer. AI can be incredibly beneficial in building meaningful solutions, AI can be transformative in helping the farming community optimize water usage and energy consumption and even determine what crops should be grown depending on the weather conditions and soil quality. The technology is now revolutionizing the Agritech segment in several ways, including through predictive modelling, supply chain management, and automation to improve efficiency and minimize costs.
Similarly, blockchain is another groundbreaking technology in the Agritech ecosystem. Its potential is only now being discovered, and even then, we have barely scratched the surface of it. By leveraging blockchain, agritech platforms can reinforce the dynamics of Agri trade, which is necessary given the rise in demand for food supply and security, and enable transparency in the agriculture ecosystem. Blockchain’s power can also be harnessed for multiple other purposes, including ensuring data authenticity, food quality, and real-time tracking of transactions. In fact, blockchain is one of the only technologies that enable traceability in the food supply chain. With more agritech platforms integrating blockchain into their operations, the technology is likely to uplift the agriculture sector sooner than anticipated.
Apart from Blockchain and AI, technologies like IoT play a crucial role in the agritech segment. Like AI, IoT has become an integral part of our daily lives. In agriculture, IoT is often used to efficiently measure and monitor soil health and data, the chemical and physical composition of crops, and weather conditions. Coupled with Machine Learning algorithms, IoT can be used to create insightful maps of the farm for more efficient farming and a high-quality yield. IoT has truly earned its place in agritech, and its usage will continue to increase for optimizing resources and costs and for better farming practices.
Further, agricultural robotics and drones are now being tested and deployed in certain areas of farming to minimize manual labour and enable farmers to make more informed decisions. For instance, agriculture robotics can be categorized into three ways based on their functionalities – weeding, crop-harvesting and aerial imagery & seed-planting drones. Today, robots are used to pick fruits, harvest vegetables as well as weeds. They are machines with motors and sensors. They perform operational tasks while intelligently responding to their environment. Some of the leading manufacturers of farm robots in India include Binary Robotics, Robo Technos, Nadaf Agro Industries, Hari Agro Industries and Shpine Technologies.
From hunters to humanless McDonalds outlets, food production and consumption have come a long way. As many would agree, we are now on the cusp of a population explosion. What matters is how we help make changes today to improve the quality of land, water, and produce for those in extreme situations and for future generations. Only by leveraging technology trends seamlessly in our essential sectors, like agritech can we create a sustainable ecosystem for the future. Agritech advancements and the ready adoption of tools are the need of the hour to sustain our booming population and economy. With this in mind, emerging and existing agritech startups are aiming for the big guns. India can lead agritech in the coming years with favorable government policies and ample interest and investment.