Investments in Indian agri-tech start-ups fell by 45% between FY22 and FY23, primarily due to a hike in global interest rates and heightened investor caution amid rising uncertainty. Meanwhile, global agri-tech investments declined by 10% between calendar years 2022 and 2023, reveals consulting firm FSG’s new report, `India’s Unfolding Agri-Tech Story: Updates and Emerging Themes in India’s Agricultural Technology Sector’.
While FY22 witnessed a boom in agri-tech start-up investments, which drove start-up valuations to unprecedented heights, the correction in FY23 has led to a more prudent investment climate. In a positive trend, start-ups operating in the mid-stream agri-tech category in India are starting to mature, as the bulk of investments (~75%) in this space are now in growth (Series B and C) and late (Series D+) stages, FSG’s analysis shows.
FSG is a global mission-driving consulting firm that partners with corporations and foundations to create equitable systems change. Its new report is a significant update to its insightful Agri-tech Report 2022, “What’s Next for Indian Agri-Tech?”
The latest report delves into the dynamic changes that have shaped the Indian agri-tech landscape over the last year, providing valuable insights into investment trends, the evolution of agri-tech start-ups, and the growing emphasis on sustainable and climate-smart agriculture.
Some of the key findings of the report are as follows:
Commenting on the trends identified by the firm, Rishi Agarwal, Managing Director, Head-Asia, FSG, said, “The shift in investment dynamics highlights the Indian agri-tech sector’s sensitivity to global economic trends. Start-ups must use periods of slower investment to refine their business models and drive towards profitability. These moments can be invaluable for building a robust foundation that can withstand market fluctuations.”
He added, “Those in the upstream agri-tech space can seize this moment to innovate and capture market share, while midstream start-ups must focus on sustainable growth strategies, leveraging their maturing status and acquisition capabilities. The decision by some key traditional agriculture companies to streamline pilot projects and focus on their core business suggests a need for a strategic pause to recalibrate their approach. This strategic shift must be executed thoughtfully to ensure they remain agile in responding to the evolving market dynamics. Balancing consolidation with continuous innovation is a tightrope they must walk.
FSG’s report provides invaluable insights for industry stakeholders, investors, and policymakers seeking to navigate the evolving agri-tech landscape in India. With the data-driven analysis and forward-looking perspectives presented in this update, organizations can make informed decisions to thrive in this dynamic sector.
“With government facilitating collectivisation, mechanisation, and digitization of Indian farms, there are plenty of emerging opportunities available for agri-tech innovations that address the key farmer problems of agro-climatic information, yield management, and price realisation. Just like UPI facilitated a paradigm shift in the Indian financial sector, a unified digitised land and soil database can provide significant grassroots impact,” said Agarwal.
“The emphasis on sustainable solutions and climate-smart agriculture, bolstered by government support, signals a significant paradigm shift. Agri-tech’s transition towards sustainability isn’t merely a trend; it’s an absolute necessity. Innovations in sustainable farming practices and technologies are poised to be the driving force behind the sector’s future growth and resilience. Companies that prioritise eco-friendly solutions and climate-smart practices today will not only meet consumer demands but also ensure the long-term viability of the sector,” he added.
About FSG
FSG is a global mission-driven consulting firm that partners with foundations and corporations to create equitable systems change. Through customised consulting services, innovative thought leadership, and learning communities, we're working to create a world where everyone can live up to their full potential. FSG serves as a strategic advisor to leaders and teams at corporations on how they can leverage their core business, CSR, and philanthropic activities to create a more equitable and sustainable world while strengthening their competitive positioning and profitability.