Citing the importance of the agricultural sector for the country’s economy, finance minister (FM) Nirmala Sitharaman made a number of announcements for the sector in the interim Budget, which will also provide a boost to the agritech startups in the country.
“Farmers are our ‘Annadata’…The sector is poised for inclusive, balanced, higher growth and productivity. These are facilitated from farmer-centric policies, income support, coverage of risks through price and insurance support, promotion of technologies and innovations through startups,” the FM said.
Besides recounting the efforts undertaken by the Modi government for the agriculture sector, Sitharman laid out plans for use of technology, promoting research and development, and increasing participation of private players to boost productivity.
“For ensuring faster growth of the sector, our government will further promote private and public investment in post-harvest activities including aggregation, modern storage, efficient supply chains, primary and secondary processing and marketing and branding,” she said.
Here’s some of the key announcements made by the FM her speech for the agriculture sector:
- After the successful adoption of Nano Urea, application of Nano DAP on various crops will be expanded in all agro-climatic zones
- Building on the initiative announced in 2022, a strategy will be formulated to achieve ‘atmanirbharta’ for oil seeds such as mustard, groundnut, sesame, soybean, and sunflower
- More impetus will be on research for high-yielding varieties, widespread adoption of modern farming techniques, market linkages, procurement, value addition, and crop insurance
- A comprehensive programme for supporting dairy farmers will be formulated. The programme will be built on the success of existing schemes such as Rashtriya Gokul Mission, National Livestock Mission, and Infrastructure Development Funds for dairy processing and animal husbandry
- Implementation of Pradhan Mantri Matsya Sampada Yojana (PMMSY) will be stepped up to enhance aquaculture productivity to 5 tonnes per hectare from 3 tonnes currently; double exports to 1 Lakh crore and generate 55 Lakh employment opportunities in near future.
- Five integrated aquaparks will be set up
Agritech Stakeholders Welcome Budget Announcements
Commenting on the announcements for the agricultural sector in the Budget, Abhilash Sethi, investment director at agriculture-focussed VC fund Omnivore, said the focus on agriculture and food processing is an encouraging sign for agritech startups.
Talking about the expectations from the Budget, a number of agritech stakeholders had highlighted the need to incentivise adoption of artificial intelligence (AI) and other technologies in the agriculture sector.
Taking a step towards this, FM Sitharaman announced that a corpus of INR 1 Lakh Cr will be established for providing 50 year interest free loans. The corpus will provide long-term financing or refinancing with long tenors and low or nil interest rates.
“This will encourage the private sector to scale up research and innovation significantly in sunrise domains,” FM said.
While the FM didn’t mention the sectors which would be a part of this, the agritech stakeholders are hoping that the industry would get a part of this corpus.
“This will provide us with a conducive financial environment to further innovate and contribute to the agricultural ecosystem,” said Prashant Vasan, CEO of Madras Mandi.
Further, the government extended certain tax benefits for startups till March 31, 2025 in the Budget, which is expected to help agritech startups as well.
“… the tax-free status for investments by sovereign wealth funds and pension funds for an extra year aligns with our growth strategy, encouraging strategic partnerships and capital infusion into our startup,” Vasan added.
However, the interim budget missed touching a few points. The agritech ecosystem stakeholders believe that there is a dire need for IP-led biotechnology and alternate materials startups in the agriculture sector.
The government should act as the first buyer to provide the necessary credibility required for these startups in global markets, as per Sethi. Further, apart from credit push, the government should also focus on providing large-format credit guarantee schemes.
“This is particularly necessary for companies involved in B2B agri trading. Furthermore, policies to limit buyer credit period to a maximum of 45-60 days need to be strictly institutionalised,” said Omnivore’s Sethi.