Finance Minister Nirmala Sitharaman on Wednesday proposed to set up an accelerator fund to support agritech startups as well as to encourage entrepreneurship, primarily in rural areas.
“The fund is meant to bring modern technologies to Indian farms to innovative and effective farming solutions. It will be a part of inclusive development,” Sitharaman said in the Parliament while presenting the Union Budget 2023.
“The accelerator will aim for working on innovative ideas and may also help with packaged food, which will not only help in increasing productivity but also farmer income,” said Anil Joshi, managing partner at Unicorn India Ventures.
In the past few years, India has witnessed a dramatic rise in the agritech sector.
The private equity investments in agritech space have skyrocketed over the past four years – witnessing an increase of more than 50 per cent per annum to aggregate approximately Rs 6,600 crore, weighed the Economic Survey 2023, which was tabled by Sitharaman on Tuesday.
The industry, however, is still in the nascent stages compared with other sectors. For instance, it is yet to mint a unicorn, which is a privately held firm with a valuation of $1 billion or more.
However, going forward, things might change for the industry, especially with the government’s increasing interest to foster agri-focussed innovation and real-world solutions in the country.
The central government currently runs Fund of Funds for Startups, which has a corpus of Rs 10,000 crore and also a Startup India Seed Fund Scheme to promote entrepreneurship in the country.
Presently, India is a home to more than 1,000 agritech startups assisting farmers in improving farming techniques, said the Economic Survey 2023.
Besides the upcoming agritech fund, Sitharaman also announced a slew of programmes and incentives focussed towards agritech startups. For instance, the government plans on creating digital public goods in the agriculture space. It will be built as an open source, open standard and interoperable public good that will help develop a farmer-centric solution for crop planning, she said.
Agritech players believe that the infrastructure will bring much-needed change to the ecosystem. “The government's support for digital public infrastructure will assist farmers in crop estimation and planning by raising awareness and facilitating higher-quality input,” said Amit Sinha, cofounder of Unnati.
“The National Cooperative Database will be established to map the country's decentralised storage capacities. This initiative will lay the groundwork for last-mile linkage farmers to store their produce and earn fair prices. It will also increase opportunities for private-sector investment in agricultural infrastructure," said Sinha.
“The fund will increase investor interest in the agritech sector and attract more capital generally. The success of this endeavor, however, hinges on its implementation and we look forward to more details in the coming months,” said Mark Kahn, managing partner, Omnivore, a venture capital firm which backs startups operating in the agriculture and food systems.
Of all the segments, the Central government as well as the agricultural ministry appears to be more focused towards supporting startups coming with products promoting millet consumption.
For instance, the FM said that the government will support the Hyderabad-based Millet Institute as a centre of excellence. Earlier, the United Nations declared 2023 as the International Year of Millets, with an aim to create awareness and increase the production and consumption of grain.
Also, under the International Year of Millet (IYOM) 2023, the Ministry of Agriculture has so far funded 66 startups with more than Rs. 6.25 crores, Union Minister for Agriculture and Farmers Welfare, Narendra Singh Tomar had said in November.
At present, more than 500 startups are working in the millet value chains, while the Indian Institute of Millets Research has incubated 250 startups under Rashtriya Krishi Vikas Yojana – Remunerative Approaches for Agriculture and Allied Sectors Rejuvenation programme, per the Economic Survey 2023.