India's agritech sector could touch $35 billion by 2025, says Bain

13 July 2021 4 min. read
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Agriculture in India is embarking on a modernisation drive – backed with regulatory headwinds and paving the way for a thriving agricultural technology (agritech) segment. A new Bain & Company report examines sectoral changes.

Agriculture is a centrepiece of the Indian economy – a $370 billion sector that employs over 40% of the 1-billion-plus population. That said, the sector falls short on several fronts – across productivity, efficiency and infrastructure. According to Bain & Company, a much-needed overhaul is on its way.

In a new report, the strategy consultancy highlights three pieces of agricultural legislature that came through the Indian parliament last year – which, aside from sparking protracted outcry from small land holders who feel they stand to lose income, might just propel Indian farming into a new era.

India is the third largest country in terms of agritech funding

“We are at a key moment when we can leapfrog from the traditional methods to a new, technology-friendly way of growing, processing, and selling food,” said Prashant Sarin, Bain india partner and head of the firm’s advanced manufacturing and services, energy and natural resources practices.

Key in Sarin’s comments is a focus on technology. Last year’s reforms aim to bring corporates and private businesses into the agri fore – by directly purchasing produce, taking charge of the supply chain, and broadly investing in the sector’s modernisation. 

And so far, much of this investment seems focused on agritech – digital tools that can enhance and optimise any or every part of the agricultural supply chain to meet ballooning demand. Examples abound: digitalised credit ratings and insurance are making it easier for farmers to receive loans; smart weather prediction and soil monitoring allow for more accurate and sustainable farming practices; and digitalised dashboards are giving consumers a real time overview of all farming activities.

India’s agritech sector could grow to $35 billion by 2025

These are just a handful of agritech tools that are rapidly gaining popularity – particularly among investors. Already in the last four years (2016 to 2020), India was the third largest receiver of agritech funding in the world, behind only the US and Germany. Fresh, innovative startups attracted most of these funds – and will continue to do so – while mature propositions have a strong base to launch expansion plans. 

The new legislation has made sure of this. Per Bain’s report, agritech investments in India could touch $35 billion by as early as 2025 – owing to the confluence of regulatory shifts and tech investments. Agritech is emerging for all aspects of the value chain – from tech-powered farm inputs to logistics tools, and all the way to ecommerce for the purchase of fresh produce. 

“Digital disruption across the agricultural and agritech value chain is enabling ‘uberisation’ of services, converting capital investment assets to pay- per-use models and creating online communities along with online input and output marketplaces,” noted Parijat Jain, Bain India partner and agribusiness lead. 

National procurement strategy could save corporations 10% in costsThis far-reaching digitalisation drive is creating value across India’s agricultural sector – and investors are keen to get in on the action. At the other end of the spectrum, Bain’s authors point out how new legislation has also paved the way for savings among agribusinesses – with a special nod to a new coherent national strategy on procurement. 

Per the report, the strategy could save up to 10% in food procurement costs for corporations – by cutting inefficiencies in key stages of the value chain. The imperative now is to make the most of these shifts, and propel India’s agri sector and economy as a whole to new heights. 

“Companies need to be ready to address the challenges in this journey of change while exploiting the opportunity it represents over the coming years,” concluded Bain India associate partner Shalabh Singawne.