Fast-pacing India's March Towards a $5-trillion Economy By Nurturing the Agritech Industry Making use of digital technologies such as AI, ML and IoT, agritech players are triggering a grain revolution like never before

India appears well on course to achieve the $5-trillion target by 2024-25, it has set for itself. As the country further marches ahead, a heartening aspect that has emerged is the stable traction managed by the agriculture sector to maintain its contribution to the overall GDP and thereby keep pace with the economic growth. For the year 2020-21, this contribution was 19.9 per cent, marginally down from the about 20 per cent that it contributed in 2003-04.

This trend becomes even more magnified when one takes into account that last year the overall economy in terms of gross value added (GVA) contracted by 7.2 per cent impacted by the unexpected onslaught of the pandemic. The positive effect of the growth registered in the agriculture sector is widespread as multiple value chains and industries are directly dependent on it. Also with the sector employing almost 50 per cent of the country's population, it is critical to sustaining this northward momentum.

The Union Budget indeed has always been supportive and kind to the overall interests of the sector. Last year, the agriculture ministry was allocated INR 1,31,531 crore at a 14 per cent yearly rise. The PM-Kisan Yogana has also been supportive of the employment objectives of the farming workforce. Other incentives have been in form of interest subsidies and crop insurance. In many ways this has resulted in the country not only being self-sufficient in terms of its farm produce needs but also facilitated a position to export and thereby contribute to the country's foreign exchange cause.

However, one concerning element to this growth momentum is that of pandemic-led disruptions in the agrichain ecosystem. Be it labour shortage or supply chain disturbances, the resultant impact has been in the form of a rise in inflation thereby eventually leading to increase in prices of agriculture-led commodities. If not addressed at the right juncture this has the potential threat to undo all the benefits gained in the last few years. And it is here that the role of new-age technology-driven agritech landscape finds relevance.

Making use of digital technologies such as AI, ML and IoT, such agritech players are triggering a grain revolution like never before by enabling optimum use of the farm produce. They also help mitigate the supply chain dynamics and ensure a seamless stream of resources by effective use of technology. Moreover some of these agritech players have scaled up and embraced forward integration to also empower farmers to access financial as well as digital marketplace avenues. In areas where such agritech players are operational, all these combined have helped a reasonable chunk of the farming community including FPOs.

With their support to the farming community being holistic and on multiple dimensions such as pre-harvest activities, storage, digital lending and digital marketplace, it is required that a special policy framework along with adequate budgetary incentives be extended to this sunrise sector. Such incentives may be in form of encouraging technology-led disruptions in R&D related to the agriculture sector. Also incentives towards equipping the banks to achieve their respective priority lending objectives should also be considered so that in turn it motivates other agritech and fintech players to open up to this huge untapped market of offering lending services to the farming community.

Furthermore tax concessions and capital subsidy for setting up warehouses closer to farm gates is also much desired as it will encourage more players to address the latent requirements of small farmers and FPOs.

While the farm laws were a welcome step, its rollback should not hamper the approach planned to address the larger interests of the farming community. The age-old Agricultural Produce Market Committee should be reconsidered with a modern-day market-driven framework that enables stakeholders to optimize their value resulting in a win-win situation for all.

India's agritech sector has already made its mark with global VCs vying to gain a share of the pie. This is a direct reflection of the potential this domain holds for a long time to come. A timely intervention in form of budgetary support is the need of the hour as agritech industry which sits at the confluence of the technology as well as agriculture industries, beckons to fast pace the country's march towards a global economic superpower.