Expectations Of Agritech Sector From Union Budget 2023

The agriculture sector is one of the mainstays of the Indian economy as it accounts for around 19 per cent of the Gross Value Added (GVA) of the economy and employs more than 50 per cent of the country's workforce2. The sector is of particular importance in rural areas, where it provides livelihood for millions of small and marginal farmers3 and their families. Despite its importance to the economy, the sector has been grappling with challenges such as low productivity, limited value addition, inadequate infrastructure, limited access to credit and low adoption of modern technologies. The emergence of various Agri-tech solutions disrupted the Indian agriculture value chain over the last few years. This was evident in the number of start-ups that emerged in this space and significant investments that followed in order to address cutting issues ranging from providing efficient input and output market linkages with robust infrastructure, ensuring better productivity through precision agriculture and advisory services, improving quality and traceability of the products, digitisation of records through efficient farm management providing access to finance and insurance to the farming community. 

The Government of India (GoI) recognised the importance and potential of digital agriculture to improve the productivity and sustainability of the country's agricultural sector and launched the Digital Agriculture Mission – with a primary focus on digital infrastructure, digital extension services, digital finance and digital research and development. While this had been a welcome move by the GoI, focussed efforts are needed to fast-track these initiatives alongside exploring new initiatives to address the challenges the agri-tech sector is facing. Budget 2023-24 may address some of these issues listed below: 

1. Support in digital infrastructure development and improving its adoption by farmers 

The Budget should emphasise expediting the implementation of the BharatNet project which will help establish a highly scalable network infrastructure to provide affordable broadband connectivity in rural areas. Even though there has been a steady rise in internet penetration in India, around 48cr rural Indians4 (close to 50% of rural India) still have not adopted the internet. The Budget may focus on incentivising adoption by farmers through subsidisation of smartphone prices and internet tariffs and at the same encourage investment by private players in data centres in rural areas.  

2. Promoting data-driven ecosystem and digital services through Agri Stack  

The Government has started implementing the concept of India Digital Ecosystem of Agriculture (IDEA)5 - which is based on a framework for Agri Stack that would serve as a foundation to develop new agri-focused solutions leveraging emerging technologies. One major roadblock is the collection of data from farmer groups. The current scheme on the promotion of FPOs may be suitably amended to include a component on digital literacy and adoption which would help in quick scaling of the envisaged stack and roll-out services such as digitisation of land records and other data which can be analysed using emerging technologies to improve farmer incomes and overall productivity of the sector. 

3. Incentivising capital investments at farmgate levels to boost the MSME segment and promote rural entrepreneurship  

Given a large section of the farmers in India are small and marginal, more Custom Hiring Centres (CHCs) may be encouraged which can solve the problems of mechanisation and improve productivity on one hand and on the other hand can promote rural entrepreneurship. Support may be given to these rural enterprenuers, a large section of whom would belong to the MSME segment towards incentivising part of capital investments as well as training on digital adoption which would help them train the farmers. The CHCs may be mandated to encourage the usage of technology and new-age machinery such as drones which will help raise the productivity of farmers.  

4. Promoting Agritech Startups  

The Central Government has already funded nearly 800 start-ups through the Innovation and Agri-entrepreneurship Development Programme under the Rashtriya Krishi Vikas Yojana (RKVY) to promote innovation and application of artificial intelligence (AI), internet of things (IoT), remote sensing, information and communication technology (ICT), GIS technology and blockchain in the agriculture sector. Given many of the Agritech start-ups belong to the MSME segment, the upcoming Budget may have allocations for promoting start-ups through low-interest loans, tax breaks, and other financial incentives in the above areas and also in areas focused on the development and modernisation of infrastructure, quality monitoring & upgradation and value addition. This will help in the reduction of wastage and improve productivity, quality and farmer realisations. 

5. Focus on output linkage through e-commerce  

Market linkage is a critical constraint for most small-holding farmers who largely do not have visibility of the downstream value chain and thus command a minuscule share of the consumer wallet. Several State Governments have started physical outlets which enable farmers to have direct market access. However, given the increasing adoption of online buying, the Government should focus on pilots to test the viability of direct market linkage through e-commerce (on the lines of e-NAM). This can be started with select farmer-producer organisations in PPP mode as farmers may not have the requisite skills for marketing and running an e-commerce set-up. States may be given mandates to focus on rolling out such initiatives and later adopt ‘phygital channels’ (merging the proposed e-commerce model with the existing physical outlets). Suitable allocation in the Budget towards building an efficient market linkage programme through e-commerce may go a long way in creating a remunerative farming system in India.

Source : BWdisrup