Agri Business

India spends ₹22,500 crore annually on agri innovation, says report

KV Kurmanath Hyderabad | Updated on October 08, 2021

Bulk of investments are going to crops

India spends about ₹22,500 crore ($3 billion) annually on agricultural innovation. The per capita spending on agricultural innovation is a meagre ₹187.50 ($2.5).

About 75 per cent of the overall investments come from the Centre’s departments. Almost all of the public investment goes to research institutes and government agencies.

Interestingly, institutional investors contribute about ₹3,750-4,500 crore ($500-600 million) annually for agriculture innovation targeting adoption, according to a research report published by research firm Dalberg Advisors for Commission on Sustainable Agriculture Intensification (CoSAI). “Keeping in mind the environmental challenges of growing more food in India, more innovation investments for sustainable agriculture are needed,” Nirat Bhatnagar, Partner, Dalberg Advisors, has said in the report.

“The areas that are under invested for sustainable agriculture intensification include natural resource management (soil health, sustainable water, biodiversity) as well as investments in knowledge management and financing for sustainable agriculture,” the report said.

Private investments

The bulk of innovation investments are going to crops, while much of the agri-tech investments by institutional investors have been used to improve market linkages through agri-marketplaces.

Over 60 per cent of innovation investments are focused on enhancing market linkages through agri-marketplaces, focusing on inputs such as seeds and fertilisers, as well as access to end consumers.

The number of start-ups in the space is growing significantly. The number of agritech startups funded by venture capital funds stood at 500.

“This growth is mostly led by global investors like Tiger Global Management, Accel, Blackstone, and Syngenta Ventures, to name a few,” the report said.

“Most of the start-up funding was directed towards tech-enabled supply chains to create market linkages to procure farming inputs and to sell final produce. The NGOs receive a very small share of the funding,” it pointed out.

While the numbers look impressive, the per capita spending turns out to be very low. “The per capita spending on agricultural innovation is less than ₹150 a year, though in absolute terms, it is very significant ₹22,500 crore,” the report points out.

“Keeping in mind the environmental challenges of growing more food in the country, a business-as-usual approach will not suffice, and substantially more innovation investments are needed in the SAI space,” it observed.

A coordinated approach to investing for sustainable agriculture that defines clear metrics, encourages collaboration between different categories of funders is likely to prove very useful going forward, it advised.

Published on October 07, 2021

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