Private equity investments into agritech startups touch Rs 6,600 Cr, says report

A report by Bain & Company and CII noted how the agriculture sector in India is primed for disruption with innovative solutions from agritech startups.
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The investments from the private equity (PE) segment into the agritech space in India is growing by 50 percent per annum, aggregating around Rs 6,600 crore between 2017 and 2020, said a report by by Bain & Company and Confederation of Indian Industry (CII).

Titled, ‘Innovation in India’s Rural Economy: Disruptive Business Models are Stimulating Inclusive Growth in Agriculture and Rural Finance’, the report noted how the broad changes in the Indian agricultural sector are leading to these investments.

The report noted that over the past decade, India’s rural ecosystem has evolved significantly with multiple enablers priming this space for future growth. These trends have created an environment ripe for innovation— allowing startups and traditional players to introduce disruptive business models that address inefficiencies, particularly in India’s agriculture and finance sectors.

The report said significant domestic and international investments are being pumped into the sector to improve efficiency and access to credit.

Parijat Jain, partner and leader of Bain’s Agribusiness practice in India, said,

“Disruption in India’s food and agriculture will evolve from traditional agriculture to new farming models, advanced agritech services, and new food products. In the last six years, several startups have emerged to reduce systemic inefficiencies among inputs and marketplaces, precision farming, processing and storage.”

The report noted that investors have focused on opportunities that address systemic issues, building sustainable systems, and ensuring inclusive growth. Several global tech giants see this space as a new growth opportunity and are investing in innovative solutions for crop health monitoring and yield estimation.

Tarun Sawhney, Chairman, CII Rural & District Economy Council, said:

“India’s rural economy is poised for future growth enabled by rural digitisation, affordable technological access, financial inclusion initiatives, FPO and FPC community empowerment, improved infrastructure and access, increased investor focus, and a surge of tech startups in the space”.

India’s rural economy contributed nearly half of the nation’s overall GDP in 2019–2020. Two-thirds of India’s population participated in its rural economy in the past two years, and agriculture — the largest sub-sector within the rural economy, had the highest share of output, contributing approximately 37 percent of the total rural GDP.

The agricultural sector also witnessed the highest disruption in terms of smartphone and internet penetration. This ecosystem is now at an inflection point, and companies that address inefficiencies across the value chain will have explosive growth potential, the report noted.

Edited by Megha Reddy

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