India is an agrarian economy, however numerous challenges deter the Indian agriculture sector from delivering its vast potential. Agriculture today, has considerably transformed from mere farm activity to a mammoth market-driven industry.  It has attained a vast canvas that incorporates businesses involved in agri-tech, food production, farm machinery, supply chain management, production of seeds, fertilisers, agri-chemicals, irrigation equipments, processing, distribution, marketing, trade, wholesale and retail.

According to a report by the India Brand Equity Foundation (IBEF) of the Ministry of Commerce and Industry, the agricultural exports from India is probable to reach $60 billion by end of this year (2022).

Problems in The Agricultural Ecosystem

Key issues plaguing the sector comprise of smaller landholding size, disheartening primary and secondary processing infrastructure, profiteering middlemen, a complex supply chain with many levels and intermediaries, and limited last-mile delivery of services.

Lack of infrastructure, data consolidation, and awareness about data processing and its availability have also been some of the problems the ecosystem faces. In addition, there is a lack of awareness of agricultural information, access to good quality seeds, lack of sufficient irrigation infrastructure and shortage of farmer capital.

The Solution

India needs professionalism in the agri-business area to expedite the flow of advancements to squeeze out its intrinsic competitive advantages. It can be achieved better through an empirical shape of innovative ideas and the use of Information and Communication Technology.

For India to reap the full potential of ICT and AI, a collaboration of the government, industries and start-ups, necessary infrastructure, policy support, facilitating AI innovation across different segments of this sector, and good mentoring and furnishing financial support are essential.

NASSCOM is attempting to catalyse AI adoption in the country by fostering co-innovation and co-creation with start-ups, building hackathon platforms for creativity, innovations andpromotion of research. Private bodies are also invited to liaison with the government in creating policy frameworks for AI in India.

Rising AI adoption

According to a NASSCOM- Ernst & Young Report, artificial intelligence is foreseen to play a pivotal role in the growth of Indian agriculture alleviating the sector from stressful circumstances and catalysing the transition of data-driven farming practices.

AI can play a central role in influencing both macro and micro farm-level data compiled and analysed through sensors to help maximize outputs and optimize the use of the available resources.

It is not surprising that many start-ups in the agro-tech sector have been vigorously using AI enabled data to build and improve efficiencies within their system which will benefit the farming communities and the consumers alike.

Burgeoning Start-up Ecosystem

Start-ups are accepted worldwide as the first step towards radical changes in different realms. Start-ups have innovation and creativity at their core. These were inaugurated in India almost three decades ago but picked up only in the beginning of this century. Several reports have placed India after the UK and the US in technology-propelled start-ups. 'Startup India', a prioritized scheme initiated in 2016 by the Indian government, aims to facilitate entrepreneurship and promote innovations to strengthen the start-up ecosystem in India and help technologists to become job creators instead of job seekers.

Growing Agri-tech Providers

Agri-tech start-ups can erase informalities in the domestic markets, improve scalability, traceability and transparency in the agriculture value chains and build end-to-end technology-driven set-up and value chains that cover everything- production, processing and distribution.

Agri-tech start-ups also have the immense capacity in areas like farm-specific and data-driven development and diagnostics to ascertain soil health and crop health, and collect real-time data about insects, pests and diseases in crop fields via image recognition technology.

Apart from these considerable market-linking models, agri-tech start-ups can play a key role in implementing the Internet of Things (IoT) for farmers, facilitating smart farming, high-tech precision farming and automated farm technologies, thereupon, improving efficiency and productivity.

Ease in Availing Financial Services

Farm equipment renting is a high capacity area to curtail the input costs since contemporary farm equipment is not affordable for an average Indian farmer. Farming services’ start-ups have a vast scope to organise farmers' groups and assure timely availability of various materials to underprivileged needy farmers. So far, primarily money had been flowing in cash in farming. The Direct Benefit Transfer (DBT) method of payment to farmers for their crops is a huge step toward an upheaval in agri-financial management. This change is creating opportunities for fintech start-ups to digitalise payment from and to farmers through different portals linked to their accounts and develop a credit profile system for funding and lending, thereby, removing exploitative lending systems.

Government Support

Apart from 'Startup India', there is 'Atal Innovation Mission', 'NewGen Innovation and Entrepreneurship Development Centres' and 'Venture Capital Assistance' promoted by the Small Farmers’ Agri-business Consortium- some government initiatives supportive of innovative changes in agriculture.

There are various encouraging avenues to follow under the ‘Agriculture Grand Challenge’ plan of the Ministry of Agriculture and Farmers’ Welfare that is giving incubation backing for frontier technology agri-tech start-ups such as-

  • Fast grading solutions
  • Handling vast quantities of agricultural stocks under eNAM
  • Testing e-soil quickly
  • Engaging food processors with farmers via e-marketplaces
  • Dissemination of farming and food-related information to the last mile

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With a rising population and demand for greater quantity and better quality of ‘food, fibre and feed’, Indian agriculture is getting exceedingly burdened. According to estimates from the Indian Council for Agricultural Research (ICAR), the market pressure for food grains would increase from 192 million tonnes in the year 2000 to 345 million tonnes in 2030. Thus, by the end of this decade, the production of food grains requires to rise at the rate of 5.5 million tonnes yearly.

The number of agri-tech start-ups has swelled to nearly 1000, which still only accounts for about 1 per cent of the total prospective market opportunity, according to a FICCI–PWC report. India is moving towards becoming the most populous country by the year 2027; it is predicted to be the youngest country, as per age statistics too. Therefore, this demographic dividend must be garnered by agriculture in retaining its stature as the biggest employment generation sector. The agri-tech start-ups bear the talent and promise to increase both employment as well as India's quality food grains production.