In this article, we will discuss Agri-Startups in India (Issues and Steps). So, let’s get started.
Issues regarding Agri-Startups
- According to the latest Economic Survey, 75 startups/new age companies mobilised ₹89,066 crore in April-November 2021 through the initial public offering (IPO) route, the highest in a decade. However, the share of agri-startups in this is negligible.
- The startup ecosystem in India is skewed in favour of services — Big Data, Edtech, fintech, logistics and supply chain activities — rather than agriculture and manufacturing.
- While startups have several options to mobilise funds, their early stage break-through funding normally comes from angel investors (private equity and venture capital) and the government (seed capital).
- While venture capitalists are keen on investing in startups based on their disruptive business model, high growth potential and their ability to make quick profits, agri-startups have been lagging in attracting funds.
- India has 650 plus start-ups that offer agri-tech innovations in partnership with industries and financial institutions, however, they lack scale due to the very high costs of serving smallholding farmers and building their own distribution system.
- While start-ups have good expertise in emerging technologies, they often lack the application-level domain expertise.
Steps that can be taken to Boost Agri-Entrepreneurship
- Seed Capital from Banks: Seed capital from the banks and hand-holding of agri-startups by institutions such as NABARD, by extending credit plus services, will go a long way in helping Agri-Startups establish their position in India’s startup ecosystem.
- The government should also ensure ‘ease of funding’ for agri- entrepreneurs to attain the intended objectives.
- A SEBI for Agriculture: A dedicated exchange for agri-startups may be established just like a stock exchange for small and medium enterprises.
- The Securities and Exchange Board of India (SEBI) may stipulate liberal regulatory norms for listing of agri-startups on the bourses.
- This will pave the way for raising much needed risk capital for scaling up agri-startups and rural enterprises.
- Collaboration with Field Experts: Entrepreneurs would be successful in mobilising capital from the market if they team up with agricultural researchers, financial experts, and technology wizards.
- Agri-startups will flourish in India if they are associated with industry associations like APEDA, Indian Chamber of Food & Agriculture, NASSCOM, etc., especially for testing/validation of prototypes before their launch.
- Financial Literacy: The Agri-entrepreneurs should be imparted with financial literacy and education as the startup world is full of domain professionals and engineers, who hardly know anything about finance and investors.
- Moreover, international agencies such as the World Bank and International Fund for Agricultural Development are willing to assist agri-startups in the context of achieving SDGs in general, climate action (SDG 13) in particular.
- Agri-startups with a vision of focussing on climate change and disaster management are more likely to flourish in the near future.
- Role of Government: The government should create an investor-friendly regime to attract funds in the agri-startup sector.
- Angel investors, venture capitalists and private equity holders may be given tax incentives on capital gains apart from providing ease of doing business at the time of their exit from the agri-startups.