If you want to put your money into an investment that will pay off handsomely over the next few years, the Indian agriculture sector is a good place to start. In recent years, the country’s farming policy has undergone significant changes, as well as a strong push toward agricultural exports and organic food production, all of which have boosted the industry’s profitability. Today, we’ll look at some of the most intriguing opportunities in the sector.
A Huge Opportunity
The Indian agriculture sector is expected to reach $360 billion by 2018 from its current size of around $110 billion. There are numerous opportunities in agritech to support farmers by increasing their productivity as well as ensuring effective supply chains through better inventory management. The focus on organic produce also makes it a lucrative market with high value addition potential. Another key opportunity lies in high-end scientific farming practices such as precision farming which enables accurate delivery of specific nutrients to individual plant species resulting in higher yields.
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This can be done through satellites and remote sensing technology that tracks weather patterns across large areas. This helps in assessing moisture levels, crop health, fertiliser requirements etc., thereby allowing farmers to plan accordingly and increase yield per acre substantially. Agritech companies have been using these technologies effectively to help increase yield per acre and reduce input costs for farmers. In fact most large companies have been able to develop new business models based on these technologies leading to increased revenues and profits from every unit sold.
Market Size:
Between FY20 and FY21, India’s Wheat and other cereals exports increased by 727 percent, from $ 505 million to $ 799 million. Between 2020 and 2027, the global agritech industry is expected to develop at a compound annual growth rate (CAGR) of 12.1%. India, like China and the United States, is a competitor in this market.
In the last two years, India’s agriculture sector has grown at a rapid pace. The industry, which employs the majority of the country’s workforce, accounted for 18.8% of the country’s Gross Value Added (GVA) in 2021-22, growing at a rate of 3.6 percent in 2020-21 and 3.9 percent in 2021-22. For the years 2021-22, India’s agricultural exports will surpass $50 billion.
Total food grain production in the country is expected to reach a new high of 308.65 MT in 2020-21, according to the Fourth Advance Estimates. Rice, wheat, and coarse cereals output have increased at compound annual growth rates (CAGR) of 2.7, 2.9, and 4.8 percent, respectively, over the last six years, from 2015-16 to 2020-21. During the same time period, the CAGRs for pulses, oilseeds, and cotton were 7.9, 6.1, and 2.8 percent, respectively. Cereals accounted for over 49% of total products ($10,000 million), while fresh fruit and vegetables accounted for 6% ($1342 million) in 2020-21.
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India is one of the world’s leading producers of oilseeds. Since 2016-17, India’s oilseed production has consistently increased. From 2015-16 to 2020-21, India’s oilseed production increased by over 43%. India is expected to sustain a 2.6 percent annual increase in per capita vegetable oil consumption, reaching 14 kg/capita by 2030, necessitating a 3.4 percent annual increase in imports.
India’s Sugar and sugarcane industry is the country’s second largest agro-based industry, after only cotton. In sugar season 2020-21, around 70 LMT of sugar was exported, compared to 59.60 LMT in sugar season 2019-20. Furthermore, for the sugar season 2021-22, contracts for around 30 LMT of sugar export have already been inked.
The Indian tractor industry is the world’s largest, accounting for one-third of global output. India’s farm equipment market was valued at $8.8 billion in 2017 and is predicted to grow to $12.5 billion by 2022. By 2022, the tractor market is estimated to increase at a CAGR of 7%.
- India is the world’s second-biggest producer of rice, cashew tea, wheat, cotton, groundnuts, and fruits and vegetables, and the world’s largest producer of spices, pulses, milk and jute (raw jute and jute goods).
- India is ranked third in terms of Agritech funding, with investments around $ 30-35 billion expected by 2025.
Situation in the Industry
Total foodgrain production in the country is expected to reach a new high of 308.65 million tonnes in 2020-21, up 11.15 million tonnes from 2019-20.
For around 58 percent of India’s population, Agriculture is their primary source of income.
The Government of India adopted the Indian Agriculture Export Policy, 2018 in December 2018. With a stable trade policy regime, the new strategy intended to grow India’s agricultural exports to $60 billion by 2022 and $100 billion in the next few years.
In 2019, India was the world’s ninth largest exporter of agricultural products, with a total value of $37.4 billion dollars. During the 2019-20 fiscal year, India exported agri-machinery worth $1,024 million. 76.4 percent was sold to the United Kingdom, North America, Eastern Europe, the European Union, Africa, ASEAN, and SAARC.
Rice exports grew from $1.9 billion in April-June 2020 to $2.3 billion in April-June 2021. Agricultural and allied commodity exports totaled INR 2.74 lakh crore from April 2020 to February 2021, up from INR 2.31 crore in the same period last year, suggesting a growth of 18.49 percent. The export of Basmati Rice was $2,947 million in April-December 2020, compared to $2,936 million in the same period the previous year. Iran, Saudi Arabia, Iraq, United Arab Emirates, Kuwait and European countries are among the major destinations for Indian Basmati rice exports.
172.46 million kg of tea was shipped from April to January 2021, with CIS being the top-exported Indian tea at 42.64 mkg. During the same year, the UAE was the top buyer of India tea, with 10.92 mkg of imports.
Increased demand for agriculture products has been fueled by a growing population and rising urban and rural affluence. The Ministry of Agriculture has been allocated $40.06 billion in the Union Budget of India for 2020-21.
- India is the country with the most organic farmers and the ninth-largest area under organic farming.
- India’s agriculture technology sector has the potential to develop to $24.1 billion in five years. In India, the current market size of agro tech, which includes AI-based agri innovation start-ups, is almost $204 million.
- The Bamboo Industry has a potential value of $4.29 billion dollars.
- India is the world’s second-largest consumer of vegetable oil and its top importer.
- Rice exports in August 2021 totaled $715.24 billion dollars, up 6.58 percent from $671.08 billion dollars in August 2020. In the first seven months of the current fiscal year, India’s rice exports increased by over 33% to 11.79 MT, possibly exceeding the previous fiscal year’s record of over 17 MT.
- National Mission on Edible Oils – 22 states have been identified as having a prospective area for Oil Palm development in India, totaling 27.99 lakh hectares.
Related Feasibility Study Reports: Food Processing and Agriculture Based Projects, Snack Food, Frozen Food, Agro Processing Technology, Processed Food, Instant Food, Food Industry, Food Preservation, Canned Food, Packed Food, Ready to Eat Food, Cereal Food, Pickle, Spices, Grain Milling
GROWTH DRIVERS
Demand-Side Drivers
Increased exports, population and economic growth, and favourable demographics
Drivers on the supply side
Hybrid and genetically modified seeds, a conducive climate for agriculture and a diverse range of crops, and mechanisation Eastern India’s irrigation facilities and Green Revolution.
Support from Policymakers
Increasing MSP and increasing institutional credit New initiatives such as the Paramparagat Krishi Vikas Yojana, Pradhanmantri Gram, Sinchai Yojana, and Sansad Adarsh Gram Yojana have been introduced, as well as the opening of wheat and rice exports.
Logistics support
Kisan Rath (a mobile app for farmers, FPOs, and traders), 200+ Kisan Rails, and the Krishi Udaan Scheme for produce transportation, as well as Perishable Cargo Centres, cold storage facilities at airports and inland container depots, and cargo terminals and warehouses, are all examples of logistics support initiatives.
TRENDS IN THE INDUSTRY
Innovation in the Digital Realm
Infrastructure development, supply chain management, and technological enablement of sectors such as quality, traceability, logistics and distribution, as well as other parts of the value chain, can all benefit from digital innovation in agriculture.
Taking Advantage of Farmer Producer Organizations (FPOs)
Using the potential of Farmer Producer Organizations (FPOs) to monetize the number of farmers engaged through initiatives like FPOs. Better insurance terms, farm produce transit insurance, quality evaluation infrastructure, precision agriculture technologies for better crop management, and so forth.
Forestry Sector Foreign Investment
The Japan International Cooperation Agency (JICA) and the Government of India have agreed to give an Official Development Assistance (ODA) loan for the Project for Sustainable Forest Management for 12,287 million Japanese Yen (about INR 750 crore).
Government Assistance in the Forestry Industry
The Indian government has announced a list of 50 minor forest products. The Indian government has established Van Dhan Vikas Karykram, under which Minor Forest Produce gatherers will be trained in scientific methods of collecting Minor Forest Produces, processing, and value addition, among other things.
Sericulture Plantation
Assam, Arunachal Pradesh, the Bodoland Territorial Council (BTC), and Meghalaya have received assistance to identify and develop pockets in the forest for intensive plantations of different food plants for the Muga silkworm, as well as to build the population in wild habitat for use in breeding programmes and stock replenishment.
Ecosystem of Startups
In India’s startup ecosystem, approximately $1 billion was invested in agriculture firms in 2018.
Download PDF: The Agriculture Sector in India: Industry Overview and Business Opportunities for Agritech
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KEY STAKEHOLDERS
- Department of Agriculture, Cooperation & Farmers Welfare
- Mission for Integrated Development of Horticulture (MIDH)
- National Bee Board
- Non-Timber Forest Produce Related Links
- National Bamboo Mission, Ministry of Agriculture & Farmers Welfare
- National Medicinal Plants Board
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