The next phase of India’s agri-tech growth story will be driven by bio-stimulants, in-farm solutions, novel farming systems, and seed-to-fork traceability, according to a report by the consulting firm, FSG.

In its Agritech Report 2022 titled, ‘What’s next for Indian agri-tech? Emerging opportunities and the way forward for India’s agricultural technology sector’, FSG noted that the next wave of agri-tech growth in India will come from technological advancements in, and increased adoption of, sustainable inputs, in-farm solutions, novel farming systems, traceability, and agri-carbon.

Each of these emerging categories has the potential for positive impact and is poised for growth in India, driven by a range of socio-economic, political, and environmental factors, enabling even traditional, risk-averse investors and large agriculture companies to enter the market and begin placing bets on innovations in these categories, it said.

Funding for early-stage, deep tech, and emerging agri-tech innovations continues to grow in the near term. The recent positive developments in this regard hold promise, but agri-tech players must also watch out for more medium- and long-term trends to make informed business decisions, it said.

In the medium term, Indian agri-tech will see a funding slump amidst an overall slowdown in global investment activity, with mid-to-late stage start-ups already feeling the ripple effects. Globally, agri-tech investments are expected to decrease by at least one-third in 2022.

Investments in India’s agri-tech start-ups grew to $323 million in 2020-21.

The report said the influx of capital over the years has created 5-7 late-stage start-ups, each valued between $300 million and $800 million. These start-ups leveraged early opportunities to transform the traditional supply chain through technology and business model innovations that addressed input shortages, wastages, and a low share of the final sale price for farmers.

Traditional players

It noted that traditional agriculture companies lag behind in most categories. Large agrochemical players benefit from in-house research and development and a greater investment capacity compared to start-ups. They are, therefore, ahead in developing, producing, and marketing sustainable and specialized inputs, such as bio-fertilizers and organic fertilizers. However, they are focused on the upstream and midstream value chain, including in-farm mechanization solution providers, lag behind start-ups in most other agri-tech innovation categories, it said, adding the time is right for traditional agriculture enterprises to embrace technology.

The report also focused on how agri-tech start-ups will need an acute focus on profitability and sustainable growth to survive an emerging ‘battle of platforms’.

Rishi Agarwal, Managing Director, Head (Asia), FSG, a statement said, new developments in engineering and technology are changing traditional farming practices. Innovations in agricultural technology have the scope for improving not just agricultural yields, help adoption of sustainable farming practises, but also help farmers improve their lives.

Legacy agricultural businesses need to make calculated and fast decisions to keep up with this rapidly evolving environment. Irrespective of whether they want to become a professional solution provider or expand geographically, they will need to leverage data analytics, digital networks, among others, Agarwal said.

“While these recent positive developments are encouraging, agri-tech companies should also pay attention to medium- to long-term trends in order to make informed business decisions. India's agri-tech advances, if properly harnessed, present a golden opportunity for sustainable and equitable growth that will not only ensure agribusiness profitability but also improve farmers' livelihoods,” he said.