Indian agriculture is ‘a walled-off garden stuck in the 60s’. Private investment is the answer

Of the 1,17,254 Indian startups, barely 3,000 are classified as agri-tech startups, and not one of these features in the 100-odd unicorns. What’s plaguing the industry?

New Delhi, June 17, dmanewsdesk: Agriculture in India is like a child in an Indian family presented with three “impossible asks,” former IAS officer and agriculture secretary of Madhya Pradesh Pravesh Sharma declared in front of an audience. The three demands from Indian agriculture are global competitiveness, environmental sustainability, and social inclusiveness.

Without dwelling on the past too much, Sharma was quick to draw attention to the crisis currently imploding within the agriculture industry. He noted that while industrial and telecom services policies gradually moved toward the global best practices post-1991, Indian farming didn’t.

Agriculture became “a walled-off garden”, resulting in the sector “remaining static in a ’60s-70s mindset.” The reason was the neglect of the farming sector.

Problems with the agriculture sector

On 30 May, former bureaucrats, scientists, researchers, and businessmen involved in the agriculture sector gathered at the India International Centre (IIC) for a talk on a pressing question: Can agri-startups trigger the transformation of Indian agriculture?

Apart from Sharma, the speaker of the evening, the session had former secretary Siraj Hussain as the chair and Deepak Pental, a genetics professor and former Delhi University vice-chancellor. Sharma shared his rich experience in agricultural ventures since leaving government service eight years ago.

The talk, which went on for over 1.5 hours, went beyond agri-tech startups or the economics of agriculture to provide a wider perspective on the problems faced by the sector and the measures needed to alleviate them. Several agriculture-related government decisions—which caused an uproar on the streets—were mentioned with clinical precision, bereft of politics.

Sharma’s stint with the government and later as an agri-entrepreneur gave him a Janus-like view—both at past government achievements and future challenges in a more liberalised economy. He proudly claimed India’s “greatest achievement since 1947” was achieving food security, which he argued is the only sector where the country did better than China.

“This [neglect of the agriculture sector] has now become such a witch’s brew that even the government with its mandate to try to do something in 2020 had to back off. Perhaps those well-intentioned moves did not address or tend to exacerbate some of the existing challenges that large numbers of farm households were going through at that time,” Sharma said.

Is agri-tech a silver bullet?

According to Sharma, forty years of neglecting agriculture has reduced the sector to barely contributing a third to income generation. Both public and private investment in agriculture has fallen. A natural and human resources crisis is crippling the sector. Soil quality is dipping and men are swapping the farm life to become delivery workers in cities.

Sharma said that in this scenario, a section of people are expecting that “agri-tech is going to be perhaps one of the silver bullets to lead us out of the mess”.

The picture is grim. Of the 1,17,254 startups in this country, barely 3,000 are classified as agri-tech startups and only 1,500 are still alive. Of the 100-odd Indian unicorns—a company valued at $1 billion or above—not even one is an agri-tech company.

To make matters worse, these ventures are going through a “fundraising winter”. Sharma shared contrasting figures showing that Indian startups raised $29 billion in funds in 2021, whereas agri-tech raised $1.1 billion. These numbers plummeted to $8 billion for all startups in 2023, with agri-tech raising a meagre $300 million.

Need better agriculture policies

According to Sharma, a comprehensive policy, like the one during the early 2000s, is necessary for the agri-tech-led revolution to address the farm crisis.

“It was Mr Vajpayee’s very courageous decision to overrule the Swadeshi Jagran Manch and allow wheat and cotton strains to be embedded in our seed companies, which led to that revolution. It was the investment in research by private sector companies in hybrid maize which led to the maize revolution,” said Sharma, who had also worked as part of Vajpayee’s PMO.

He also called for “an overall framework” of private investment in agriculture. Sharma laid out that the bulk of investment in agri-tech will not come from FDI or startups but from domestic sources, both public and private.

“It is the Indian private sector which is holding back on investment in agri-technology because they do not see a clear path,” he said.

Source: The Print