India’s agritech market to grow to $30-$35 billion by 2025: Bain & Company

As India emerges from the severe impact of the second wave of the Covid-19 pandemic that disrupted businesses, and as a fall of the regulatory changes in the recent years, agritech is likely to see substantial investments. The $370 billion agriculture sector is expected to undergo a complete transformation in the coming years and is projected to create a $30 billion to $35 billion value pool in agri-logistics, offtake, and agri-input delivery by 2025, estimates global consultancy Bain & Company.

Bain’s report ‘Indian agriculture: ripe for disruption’,  considers setting up integrated agritech platforms, creation of incubation wings for new business models, and the reinvention of current businesses as key for agritech companies to leverage these opportunities.

India’s agritech and agri-ecosystem sectors is already seeing significant interest from the investor community in the past few years. India is the third-largest nation in terms of funding received and start-ups in the agritech space and it is expected that there will be significant value creation in the agricultural value chain across the entire ecosystem over the next two decades, which will fundamentally change the way we produce and consume food in India and globally, the Bain report said.

The top deals in agriculture so far have been investments into companies like Ninjacart, AgroStar, Mahyco Grow, Husk, WayCool Foods and Products, Jumbotail, Vahdam, and DeHaat (Green AgRevolution). Investments in Indian agritech have increased over the past few years – from $ 91 million in 2017 to $ 329 million in 2020 at a CAGR of 53 percent and this trend is expected to continue.

“Between 2017 and 2020, India received about $1 billion in agritech funding and we expect much more investment in this space, as Indian agriculture adopts digital technologies. Overall, we are still in the first chapter of digital and agriculture in India —adopting technology-friendly practices will not only transform the critical agricultural industry but also have a multiplier effect across the Indian economy,” said Prashant Sarin, partner, Bain & Co

According to the report, online grocery buyers are expected to increase five-fold from 30 million in 2019 to 150 million in 2025, while the online farm input sale market is expected to double in size during the same period from $85 billion in 2019 to $150 billion in 2025. These technological changes, capabilities, and investment on the anvil will fundamentally change the productivity and the landscape of Indian agriculture.

Further, in the next few years, India will expectedly be at the cusp of massive disruption in the food and agriculture ecosystem globally. Precision agriculture, agritech services, biotech, marketplaces, farmer services platforms, monitoring and analytics, farm management, new farming models and sustainability will disrupt traditional agriculture. For example DeHaat, Ninjacart, Indigo Agriculture.

Also emerging trends like alternative proteins, alternative feed, ocean farming, cell-based food/ingredients, green ammonia/hydrogen are likely to open new fields of growth and investment. For example Air Protein, Impossible Foods, Memphis Meats.

“Companies in the agriculture sector could build an integrated agritech platform. Companies in the agriculture sector could digitally transform internal business processes to adapt to regulatory and technological changes. Companies in other sectors could exploit the rapidly developing agritech ecosystem through a corporate venture capital centre of excellence (CoE),” the report suggests.

Today, even though the technology is in its early stages in the sector, it is driving innovation throughout the agricultural value chain. Direct sourcing, demand forecasting, and inventory management are fuelling agricultural produce sales. Digital engagement is promoting the ‘uberisation’ of services, creating online communities and marketplaces and even driving e-commerce. Firms can also save 5 percent to 10 percent or more on procurement costs of food items through a concerted national strategy.

Meanwhile, the report says that the Agricultural Produce Market Committees reforms will also enable corporates to buy directly from the farmer.

“The ECA reform incentivises investment in storage and transportation infrastructure, resulting in supply chain efficiencies. All of the above indicates that we are at the cusp of a massive disruption in the food and agriculture ecosystem over the next few years—despite the fact that Indian agriculture is one of the least digitised industries today,” says the Bain report.

India’s agricultural sector is poised to enter a transformative age on the back of technological, financial, and regulatory changes. Traditional ways of agriculture will be disrupted through newer yet sustainable ways of farming leading to new food products and their uses. There is no turning back from the road ahead. This is the best time for companies to invest and build capabilities to exploit the opportunities that lie ahead.

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