India’s agritech market is expected to boom by the rise in rural internet penetration, rapid digital transformation due to Covid-19 coupled with rising investor interest
India is home to more than 1000 agritech startups with companies witnessing a spike in demand during the lockdown this year
Will agritech startups in India be able to sustain the growth seen during the Covid-19 lockdown in the quarters to come and live up to the potential?
With 58% of the population dependent on agriculture, India is a largely agrarian economy, and the growth potential of agritech is immense in the country, given this quality.
India’s agritech sector has come a long way with 43 startups in 2013 to more than 1000 startups in 2020, driven by rise in rural internet penetration, rise in post-harvest and supply chain losses, growing investors’ interest in the sector, lack of finance and high-quality inputs for farmers.
The outbreak of Covid-19 has disrupted many industries with several SMBs and startups bearing the brunt. The restrictions imposed on logistics, the shutting down of traditional retail channels, and the sharp drop in demand, led to an unprecedented slowdown for many companies.
However, the agritech sector has proved to be surprisingly resilient in these inclement times. Strong tailwinds formed by restricted movement, migration of labour, and increased consumer awareness of health, have helped escalate the adoption of technology throughout the farming ecosystem. Moreover, the classification of agricultural products as essential commodities ensured business continuity for most players during the lockdown.
According to the survey of 67 agritech companies done by Accel-Omnivore, 85% of the surveyed companies witnessed a spike in demand during the lockdown and 51% of the surveyed companies expect to experience more than 50% growth over the last financial year.
India’s Agritech Market Overview
India’s agritech market is estimated to reach $24.1Bn by 2025, as per Inc42 Plus analysis. Our latest report India’s Agritech Market Landscape Report, 2020 delves into this emerging agritech landscape and finds out what is driving the revenue in this sector.
Among all the sub-sectors in agritech, market linkage has the highest potential to reach $12 Bn by 2025. Some of the major startups in this category are WayCool, Origo Commodities, Ninjacart, Crofarm and Others.
Agritech In The Wake Of Farm Reform Bills
While India’s recent agriculture reform bills have attracted plenty of controversy and protests from farmers across the country, there’s undoubtedly a ray of hope that the market would open up and increase agriculture income at the bottom of the chain i.e. at the farm level. Even as the bills — the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill and the Essential Commodities (Amendment) Bill — await the final go-ahead from the President, there are questions about whether they will improve market access for farmers and whether it will tackle the problem of hoarding of agri commodities by large farmers to drive up prices, and finally, the contract farming, which risks turning agriculture into a gig economy sector.
New Opportunities For Agritech Startups
FaaS Boom Imminent
Startups operating in the Farming-as-a-Service (FaaS) sub-segment include the likes of EM3 Agri Services, BigHaat and Krishify, which have been addressing the inefficiencies across the supply chain, including lack of farm mechanisation, crop advisory and access to markets. FaaS has been a boon to farmers and farmland owners who are looking to establish fixed costs and goals upfront and save on equipment and other allied costs.
Rise Of Data-Led Models And Farm Analytics
Agritech startups in India are exploring solutions around robotics, big data, smart equipment, IoT sensors and farm management software, as well as new-age agricultural practices like indoor or controlled-environment farming. All of this is pinned on agricultural data and farm analytics, which is a rising field in India.
Rise In Urban Farming
With urban farms and hydroponic farms, food is now being grown close to where the demand is, and the traditional farmland can be reutilised for other demand to balance the pressure on farmers. This is another emerging trend within agritech and one to watch out for in the next year as VC investments continue to grow.
These new opportunities and many more as represented in the latest release from Inc42 Plus — India’s Agritech Market Landscape Report, 2020 — are likely to catalyse the growth of the agritech sector by a magnitude, especially with the Covid-19 pandemic accelerating the growth and pushing farmers to move towards digital platforms.
Correction Note | 11.55, January 19, 2021
Use or reference to the trademark logo of Zuari Agro Chemicals Limited in the article was an error and the same has been rectified by removing it.