Written By: Gargi Sarma, Industry Analyst @Global Launch Base
The agricultural sector in India is expected to grow to US$ 24 billion by 2025. India's rapid population growth is the primary driver of the industry. Rising rural and urban income levels, which have contributed to an increase in demand for agricultural products across the country, provide additional support for this.
In a nutshell, India is a major agricultural powerhouse, with farmers and all other related labour constituting its foundation. The agriculture industry, like many others, has long-standing issues as well as unexpected challenges such as diverse cultures and small land holdings, which must be taken into consideration by foreign startups while entering the Indian agricultural market.
Top Challenges Faced by Foreign Startups in Indian Agricultural Market:
Doing business in India is a difficult endeavour especially when it comes to working with Indian agriculture. So, let us look into these major challenges that create hindrances for foreign startups to expand in India.
Small and fragmented land holdings: Considering any densely populated or actively farmed states, the average size of land holdings is less than one hectare, and in some areas less than 0.5 hectares. As a result, there is a significant disparity between small, medium, and large farmers. For example, testing drones for monitoring crop yield, growth stages and soil variations require around 200 acres of agricultural land which makes the size of the farm holding a major criterion for the implementation of the solution.
Technology readiness level (TRL): The inadequacy of Indian agricultural infrastructure has always been prevailing starting from the water crisis to the shortage of electricity. However, the situation is not the same across the country. Even as India's urban areas reach new heights of development, rural India remains largely unchanged which deprives the farmers of getting the basic needs for farming. For example, the steep decline in groundwater resources and their quality are serious concerns which make nearly 20% of farmers rely on electric water pumps for irrigation, which requires electricity. The agricultural sector's frequent, intermittent, low-voltage power supply has caused significant headaches for farmers, who are spending their time monitoring the supply of power without which their work cannot begin. Thus, the unavailability of electricity 24/7, no transportation, overdevelopment in one area, ineffective irrigation plans, and other factors impede agricultural growth from reaching its full potential.
Lack of significant knowledge: The inadequacy of agricultural equipment continues to be a hindrance for Indian farmers. Not all farmers are good with the latest technology in India, so some are reluctant in adopting new technologies and still believe in following their traditional farming methods. Many farmers who have followed traditional farming practices over many generations might resist change to new ones. As a result, they require professional assistance in implementing innovations, understanding complex equipment and adhering to safety measures on their farms. But the reach of such services is still very limited, and many farmers are unaware of the various channels and information that are available to them due to inconsistent infrastructure.
Thus to maximise the output in the Indian agricultural market, foreign startups must first research niche and related markets in various parts of the country to ensure that these loopholes and issues are considered while planning out their expansion in this diverse country.
Opportunities for Foreign Startups to Enter the Indian Agricultural Market:
India has established itself as one of the world's fastest-growing economies over the last few decades. Due to a variety of market conditions, such as widespread internet penetration, accelerated growth in digital services, and the subcontinent's status as the world's largest open internet market, the subcontinent provides unique opportunities for global organisations looking to expand internationally. Other factors that contribute to India's appeal include a thriving domestic market opportunity, a highly sought-after quality talent pool, and an open regulatory environment.
We now know that for foreign startups, India has long been a preferred destination because of its large and growing population, favourable demographics, and high level of domestic demand, India has a lot of growth potential but with these potentials, there are challenges which are associated with them and it is always better to test the waters before landing.
When we look at the Indian agricultural market, it is as varied and expansive as the country itself. The total market is made up of a complex set of smaller markets, each of which requires a unique approach based on the sectors and target customers. Considering such constraints, still many foreign Agritech startups (like SupPlant, Biofeed, EnvoPAP, Sensoterra, etc.,) have successfully entered the Indian agricultural market with an understanding that personal networks and connections are extremely important in the Indian agricultural market. We know that expanding to an unknown market in an unknown country is always a challenge but foreign startups have the opportunity to connect with various AgriTech accelerators in India who provide support, mentoring, funding, networking and pilot implementation to find an appropriate and smooth Indian market entry. These accelerators which are related to AgriTech are supported by various government agencies/ programmes providing access to local networks and connections in the Indian agricultural market that foreign entrepreneurs may not have access to. Moreover, these accelerators have a distinct AgriTech programme that includes an acceleration phase, a PoC development phase, and a demo day. They are also facilitated with the pilot implementation, allowing foreign startups to test the efficiency of a planned solution on a smaller scale.
Understanding the need for localization, pilot implementation, and seed-stepping of AgriTech foreign startups, the accelerator programme “Agri Launch Base” helps navigate the vastly different but vibrant Indian Agricultural market. To ensure "Enable to Scale," our scaling platform has redefined traditional accelerator programmes through its well-designed and differentiated engagement which firmly intends to fill voids for such startups.
Entering a new market often requires a certain degree of customization both on the product/ service features side and on the marketing/ positioning side. We help you validate the market opportunity for the product/ service through thorough assessment, analysis, and powerful insights within the industry. 2. Pilot We as an experienced team are closely related to agricultural lands, each of our members has hands-on experience in various farming practices which makes it easier to approach farms and work with farmers. This enables us to implement your solution on a small scale in various parts of the Indian states and identify the potential challenges to compete in the market. We provide you with detailed information on each of the outcomes from the pilot run and present it in the form of interactive reports. 3. Scaling When you are ready to scale. We help you identify the right partners, facilitate discussions and help close partnership agreements that can facilitate growth. Our network spans various government and private players within our areas of focus. Moreover, we help you expand your market across Indian states. Conclusion: The agritech ecosystem is already bringing new opportunities, and with technological advancements, the agritech sector will only grow in the coming years. Furthermore, with rising technology adoption among farmers and expanding opportunities in smart farming, precision farming, robotics and automation, and vertical farming, Agritech startups will see accelerated growth in the coming years with the help of these accelerators and incubators. Hence we believe such collaborations will assist Agri Startup in scaling innovations into successful businesses around India. Get in touch to learn more about us.