Government to set up agri accelerator fund for startups; aims to make India a global hub for millets

Finance Minister Nirmala Sitharaman, in her Union Budget 2023-24 speech on Wednesday, announced the setting up of an agriculture accelerator fund to “encourage agri-startups by young entrepreneurs in rural areas”.

Although the size of the fund was not mentioned in the Budget speech, she said it will aim at bringing innovative and affordable solutions for challenges faced by farmers in addition to developing modern technologies for agricultural practices, increase productivity, and profitability.

“Two major highlights stand out for me. One is particularly for agritech startups and an accelerator that will be allocated coupled with a focus on skilling and training on emerging technologies like drones will enable a lot of rural youngsters to be a part of the entrepreneurial journey and have their own startups,” says Agnishwar Jayaprakash, Founder and CEO of Garuda Aerospace, one of the fast-growing drone startups in India.

The government also announced the launch of Pradhan Mantri Kaushal Vikas Yojana 4.0 to provide on-job training, industry partnerships, and alignment of courses with industry needs to skill “lakhs of youth within the next three years”. The scheme will include courses in new technology such as artificial intelligence, robotics, mechatronics, and drones.

Karthik Jayaraman, Co-founder and MD of agritech startup WayCool, says that the budget is unique in three ways.

“Basically, we’ve heard ‘povertarian’ budgets in the past. We are used to hearing about subsidies, farmer subsidies in our field. This is the first one that talks about firing up the demand-supply side, making business easier and fulfilling the aspirations of a middle-income India. We have to recognise that the country has become middle-income and is well on its way there. We are not a developing country anymore. This is the first budget of the new country,” he says.

Secondly, instead of talking about price security, the budget addresses digital public infrastructure for agriculture and enables agritech startups through an accelerator fund.

“And the third, this budget uses a scalpel rather than a sword. If you see the precision with which some of the initiatives are defined, for example, distributed storage infrastructure for agriculture is a very nuanced point,” says Karthik.

Mark Kahn, Managing Partner of Omnivore, an agri-focused venture capital firm, says Budget 2023 was a very positive one for the agriculture sector.

“The government continued its strong focus on farmer incomes. It took a few concrete steps in millets and cotton that are appreciated. I personally wish there was more on becoming ‘aatmanirbhar’ (self-sufficient) in terms of oil seeds and that wasn’t much of a focus, which was a bit of a surprise,” he says.

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The year of millets

Millets, which the minister referred to as "Shree Anna", were a highlight of the Budget. The FM said the Hyderabad-based Indian Institute of Millet Research will operate as the Centre of Excellence “for sharing best practices, research, and technologies at the international level”.

Earlier this year, the Indian government said it had sponsored the proposal for 2023 to be declared as the International Year of Millets, which was accepted by the United Nations General Assembly.

India is the world's largest producer and second largest exporter of millet. Some of the more popular varieties include ragi (finger millet), jowar (sorghum), bajra (pearl millet), and sama (little millet).

The FM also proposed the building of an open-source, open-standard, interoperable digital public infrastructure for agriculture to enable inclusive solutions focused on farmers.

This would include dissemination of relevant information for crop planning and health, better access to farm inputs, credit and insurance, assistance for crop estimation, and providing market intelligence services in addition to supporting the growth of agritech startups and industry.

“Currently, there are over 600 agritech startups trying to solve challenges in different parts of the agri value chain. This interoperability will improve data collection, getting insights on time, and improving market linkages efficiency,” says Rajamanohar Somasundaram, CEO and Founder, Aquaconnect, a Chennai-based full-stack aquaculture platform.

A boost to fisheries

The government has increased the agriculture credit target by a little over 11% from Rs 18 lakh crore in 2022-23 to Rs 20 lakh crore for FY24 where the main focus areas would be animal husbandry, dairy, and fisheries.

In addition, it will launch a new sub-scheme of PM Matsya Sampada Yojana with a targeted investment of Rs 6,000 crore to “enable activities of fishermen, fish vendors, and micro & small enterprises, improve value chain efficiencies, and expand the market”.

“The biggest challenge to improve domestic fish consumption is the market linkage factor. There are a lot of credit challenges in the middle layer– between the producers (such as fish and shrimp growers) and the consumers. And that is where we needed a formal credit infusion and creation of societies. So, I see this as a welcoming step,” says Rajamanohar of Aquaconnect.

The Budget said a national database mapping cooperative societies across India is being created. The government has already initiated a programme with an investment of Rs 2,516 crore to computerise 63,000 Primary Agricultural Credit Societies (PACS) and created model by-laws to enable these to become multipurpose.

"Forming of the agriculture accelerator fund and computerisation of 63,000 PACs with an investment of Rs 2,516 crore are all extremely encouraging steps towards improving the state of the agri-startups in rural areas," says Rajesh Srivastava, Chairman, Prowess Advisors and Executive Chairman, Rabo Equity Advisors.

The government has also proposed setting up a “large number of multipurpose cooperative societies”, primary fishery societies, and dairy cooperative societies in uncovered panchayats and villages over the next five years.

The Budget also recommended the adoption of a cluster-based and value-chain approach through public-private partnerships for collaboration between various stakeholders including farmers, state , nd industry (for input supplies) and market linkages for increasing extra-long staple cotton’s productivity.

A Rs 2,200-crore programme will be launched to improve the availability of disease-free and good quality planting material for horticultural crops, the FM said.

The government also announced the launch of the PM Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth, which would provide incentives to states and Union Territories for the promotion of alternative fertilisers and balanced use of chemical fertilisers.

Neeraj Choudhary, Group head finance, plant bioscience startup Absolute, says that agriculture has performed well as per Economic Survey but that it needs "re-orientation" to overcome challenges like adverse impacts of climate change and rising input costs.

"India’s G20 presidency gives a unique opportunity to strengthen India’s role in the global economy. The budget presented a slew of initiatives that reflected our motive to take Indian agriculture to the world. To maintain this growth momentum the total allocation for the Ministry of Agriculture and Farmers' Welfare in the 2022-23 Budget was Rs 1.32 lakh crore, which was 4.3% higher than the revised estimates of the 2021-22 Budget," he says.

(The copy was updated to add quotes and correct a factual error.)