Agritech revolution: Startups offer opportunities for agricultural growth

At a time when Indian agriculture is dealing with the impacts of climate change, there is a need to pivot towards smart use of technology to improve efficiency, sustainability and resilience. While still nascent, agritech startups can play an important role in pushing the innovation frontiers of Indian agriculture. A new research article by economists at the Reserve Bank of India (RBI), published in the latest Monthly Bulletin, evaluated the agritech startup space in India and associated innovations in the agricultural sector. The findings are worth discussing here. Of the 130,000 startups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT), the agricultural sector constitutes only about 4.7 per cent of the total. Every startup requires funding to validate its ideas, develop a minimum viable product, and scale up operations. The study shows that the likelihood of developing on-farm technologies is primarily driven by the extent of deployment of advanced technologies like artificial intelligence (AI) and blockchain, access to accelerators and incubators and, like any startup, access to domestic and foreign investors.

 

Some of the main challenges cited by startups in scaling up operations are lack of access to funds, including long waiting times between valuation and fundraising, fragmented agricultural systems, longer time for revenue generation, and lack of quality agricultural data to build data-driven solutions. Further, farmers face impediments in technology adoption. Fragmented land holdings, high technology costs, and an uncertain rate of return due to weather and climate unpredictability discourage technology adoption. For instance, mapping small landholdings in the country requires data up to one-metre spatial resolution. However, the availability of high-resolution satellite images at a highly granular level remains a constraint, thereby limiting the ability of satellite imagery and remote sensing-based solutions in the sector. In this regard, addressing technology costs and generating trust in technology through direct engagement with farmers can benefit the agritech startup space and lay the foundation for a more sustainable and productive agricultural sector.

 

In this regard, the Union government’s initiatives to promote agri entrepreneurship and innovation by reducing regulatory barriers and developing innovation-driven infrastructure facilities must be welcomed. These include approval of the “Bio-RIDE” scheme to support cutting-edge research & development in biotechnology, inception of agribusiness incubator centres, and conducting agri India hackathons. The India Digital Ecosystem of Agriculture (IDEA) framework was finalised in 2022 to support the adoption of other emerging technologies in the sector, including robotics, drones and data analytics. Recently, the government also launched the Krishi-Decision Support System (Krishi-DSS) and the National Pest Surveillance System (NPSS). Both schemes aim to leverage AI and geospatial technology to give farmers real-time information on crop conditions, weather patterns and soil health, and help in pest management, respectively.

 

Leveraging agritech startups successfully requires an increased focus on agricultural research and innovation. Unfortunately, agricultural research intensity, which measures research spending relative to agricultural output is just about 0.4 per cent in the country. Research in the sector must therefore be prioritised to ensure technology adoption and raise farm incomes. In areas where technology cannot fully address problems, more structural reforms will be needed to revitalise the agricultural sector.