The State of Agritech in India: Driving Innovation and Transforming Agriculture
Dec 17, 2024
India, home to over 150 million farmers and a thriving agricultural ecosystem, is at the cusp of a technological revolution. While agriculture contributes ~20% to India’s GDP but it supports >58% of the population’s livelihood. We have seen a surge in agritech innovations in recent years. With a market size of over $400+ billion as of 20221, the sector is ripe for disruption, particularly as it grapples with challenges like inefficiencies in supply chains, wastage, and lack of market connectivity.
India is one of the top 15 exporters of agricultural products globally, with over $48B value of farm exports in 2023-243. However, despite its scale, the agriculture sector has been plagued by systemic inefficiencies that limit income generation for farmers.
Current Landscape of Agriculture
Agritech, a nascent but rapidly growing sector, is positioned to address these challenges. With a projected market potential of $580 billion by 20281, Agritech companies are building solutions that bridge critical gaps. Yet, penetration remains at a meagre 1%, signaling untapped opportunities2.Key Growth Drivers for Agritech Innovation
Several factors are driving innovation in Agritech, paving the way for transformation in agriculture:- Urbanization and Evolving Consumer Preferences
Increased urbanization and a shift towards health-conscious eating habits have created demand for fresh, traceable, and sustainably produced food. This has encouraged Agritech startups to focus on farm to fork solutions that enhance supply chain transparency. - Government Support
Policy measures and regulatory support from the government have created a conducive environment for Agritech innovation. Initiatives like digital land records, eNAM (National Agriculture Market), and subsidies for technology adoption have been instrumental. - Digital Infrastructure and Adoption
The proliferation of smartphones and affordable internet in rural areas has enabled farmers to adopt digital tools for market access, weather forecasting, and farm management. This evolving digital ecosystem underpins the success of Agritech platforms. - Supply Chain Connectivity and Traceability
Improved traceability and better supply chain connectivity are critical for reducing wastage and ensuring fair prices for farmers. Agritech solutions leveraging IoT, blockchain, and AI are addressing these needs effectively. - Physical Infrastructure Development
Investments in warehousing, cold storage, and transportation have improved the post-harvest ecosystem. Companies like Ergos, which provide farm-gate warehousing, are empowering farmers by enabling them to store produce and sell at the right time for better prices. - Wastage Reduction
India loses a significant portion of its produce due to inefficient logistics and lack of storage facilities. Agritech startups are addressing this issue by offering precision farming, better storage, and optimized supply chain solutions.
Chiratae’s Investment Focus Areas
We have backed companies across the agricultural value chain and strongly believe that Agriculture is undergoing a profound transformation, powered by technology and innovative business models. Investments across the value chain plays a pivotal role in catalyzing this change. Below, we expand on some of the exciting areas of focus across the Agritech Sector- Inputs: Sowing and Growing
Inputs cover the crucial stages of sowing and growing, where technology is reshaping traditional agricultural practices.
- Precision Agriculture and Smart Farming: Startups like Cropin have been instrumental in deploying IoT-based sensing and AI to enable precision farming, helping farmers optimize their input use and enhance yields.
- Farming as a Service (FaaS): Companies like Agrostar provide end-to-end solutions, including agronomy advisory and input delivery, directly addressing farmers’ needs for seeds, fertilizers, and crop protection products.
- Hydroponic and Contract Farming: Innovative methods like hydroponic farming are paving the way for sustainable practices, while contract farming models ensure predictable income for farmers.
- Value Addition: Storing and Processing
- Connected Warehousing: Companies like Ergos offer farm-gate warehousing solutions that empower farmers to store their produce and sell it at optimal times, improving income stability.
- Solar-Based Agri Processing: S4S Technologies leverages solar drying for value addition, enabling farmers to preserve and process their produce sustainably, creating new income streams.
- Private Labeling and D2C: Agri-processing for direct-to-consumer brands and private labeling is an emerging trend, enhancing marketability and profitability for farmers.
- Outputs: Supply Chain and Selling
- Marketplaces and E-Distribution: Platforms digitizing mandis and connecting farmers with institutional buyers are revolutionizing the supply chain.
- Farm-to-Fork (F2F): Companies like Agrostar, are leading the farm-to-fork movement, ensuring traceability and quality in exports
- Blockchain for Traceability and Farmer Connect: Blockchain technology ensures transparency in transactions, fostering trust among stakeholders in the agricultural ecosystem.
- Allied Sectors: Animal Feed, Aquaculture and Dairy
Allied sectors such as animal feed, aquaculture, and dairy are integral to the agricultural value chain, driving rural economic growth, diversifying income sources for farmers, and ensuring food security. These sectors present immense opportunities for innovation and investment, complementing the core agricultural ecosystem.
- Animal Feed: Innovations in precision-based feed formulations and sustainable feed alternatives, such as insect-based proteins and algae, are optimizing livestock productivity while reducing costs. Digital platforms are further streamlining procurement and delivery, ensuring affordability and availability for farmers.
- Aquaculture: IoT-enabled monitoring systems and AI tools are enhancing disease prevention and real-time health tracking of aquatic species. Sustainable feed innovations and improved market linkages are empowering fish and shrimp farmers to access domestic and export markets efficiently.
- Dairy: IoT-enabled milk collection systems are ensuring quality, accurate measurement, and fair pricing for farmers. Investments in cold chain infrastructure are reducing spoilage and improving logistics, while value-added products like yogurt, cheese, and flavoured milk are meeting evolving consumer demands.
At Chiratae Ventures, we are passionate about backing innovative entrepreneurs who are solving critical challenges across the agricultural value chain. Whether it’s transforming inputs through digital technologies, unlocking value addition through better storage and processing, or optimizing outputs with market linkages and traceability, we see immense potential in Agritech innovation. By investing in Agrostar, Cropin, Ergos and S4S Technologies we are driving scalable, impactful solutions that address these inefficiencies
We are excited to engage in conversations with entrepreneurs building scalable, impactful solutions in these areas. If you are an entrepreneur, building in the Agritech space, we would love to have a conversation. Together, we can empower farmers, create sustainable ecosystems, and redefine the future of Indian agriculture
For check sizes ranging from $0.5 million to $2 million, you can apply to Chiratae’s Sonic Program: https://www.chiratae.com/chiratae-sonic/ or reach out to chandraneel@chiratae.com