India’s agriculture technology sector has the potential to grow manifold to $24.1 billion in the next five years, according to a new report.
With a turnover of $204 million, India’s agri-tech sector is at under 1% of its market potential today. A big chunk of the gains will likely be made by companies addressing supply chain and financial services solutions, driven by the availability of affordable high-speed internet and maturing of India’s digital content ecosystem, the EY report on India’s agri-tech potential said.
The report has also forecast consolidation in the agri-tech space along with startups expanding horizontally to service the end-to-end needs of farmers within the next few years.
“Attractive market opportunity, nascency in investment funding and minuscule penetration by incumbent agritech players offer an opportunity for established players such as institutional retailers, e-commerce players and food processing companies to create impact at scale,” said Ankur Pahwa, partner and national leader – e-commerce and consumer internet at EY India.
EY estimates that five key categories of agritech will control the lion’s share of the sector’s turnover, with the agritech market for supplying farm inputs being as big as $1.7 billion by 2025, the market for precision agriculture and farm management growing to $3.4 billion in that time, while the market for quality management and traceability could be worth $3 billion.
The market for tech enabled supply chain and output market linkages will be the largest segment, which could be worth $12 billion by 2025, according to EY. The second largest segment in the overall agritech market could be for financial services, with a market potential of $4.1 billion in the next five years.
Funding in the sector so far is also skewed towards startups serving these five sectors, with a bulk of the money being pumped into startups building agri supply chains and market linkages.
Ninjacart, Waycool and Jumbotail alone have raised $252 million in funding, out of $301 million in total funding that has gone into startups in this segment. According to the report, there are over 500 agritech startups in the country, with 57 of them servicing the five high categories and have raised a combined total of $532 million till April 2020.