AgriTech is the New Sunrise Sector for India

In 1956, the newly elected Prime Minister of India, Lal Bahadur Shastri hailed at a public gathering at Ramlila Maidan, Delhi, `JaiJawaan Jai Kisaan'. At a time when India was facing an attack by Pakistan and an acute shortage of food grains, these famous words were like a battle cry to enthuse the soldiers to fight gallantly and for farmers to help the country overcome the food shortage. Needless to say, farmers have forever formed the very backbone of the country.

In fact one of the first things we learn in school about our country is that we are an agricultural nation. With the second largest agricultural land area in the world and about 60 percent of rural Indian households earning their livelihood through agriculture, the importance of it can hardly be overstated.

However, for years the Indian agricultural system has been in shambles. Replete with supply chain inefficiencies, as much as 40 percent of the produce is said to be wasted before it even reaches the end consumer. A report concluded that on an average Indian incurs a post-harvest loss of over $13 Billion every year in agricultural value. Farmers also face challenges when it comes to access to agricultural support material, right know how and financial assistance. And, the less said about the financial hardships faced by small farmers, the better.

In all of this an unlikely ally has however emerged over the last few years; agritech startups. A new crop of technically advanced young entrepreneurs have taken it upon themselves to solve these aforementioned challenges and streamline the otherwise unorganized sector.

Agritech has emerged as a sunrise sector in India. The country is said to be home to over 600 agritech startups attempting to solve challenges in the agri value chain. Experts though believe that this number only accounts for about one percent of the potential market opportunity. An FICCI-PwC report estimates this opportunity to be worth $24 billion. A Ken Research report, estimated that the Indian Agritech market was expected to grow at a CAGR of 32 per cent from FY20 to FY25.

Another supportive factor to the sector's growth is the confidence shown by the Indian VC community. In spite of the pandemic affecting deal activity and investments throughout 2020, the agritech segment managed to double the investment and received more than $500 million in investments, as compared to $248 million in 2019.

While the penetration of these solutions still remains low at about 9-10 percent, yet we are on the right track. It will be an interesting few years to see how the agtech industry increases penetration and brings its innovative solutions to the very deep pockets of India.

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