Agricultural Technology Adoption Market in India 2023-2028

Agricultural Technology Adoption Market in India 2023-2028

Agricultural technology, often referred to as Agri-tech, encompasses a comprehensive range of tools, equipment, farming methodologies, and inputs that are specifically designed to enhance the efficiency and productivity of agricultural practices. Agriculture, as a sector, encompasses activities related to soil cultivation, the growth of food and fiber crops, and the raising of livestock.

The fusion of technology with agriculture presents abundant revenue opportunities for domestic as well as global players operating in India. It also fosters innovation in the agricultural sector, allowing market players to utilize data digitization, data platforms, data analytics, AI, ML, IoT, and Software as a Service (SaaS) in their offerings and gain a competitive advantage. The B2B, B2B2C, B2C, and export markets are actively being participated in by the Indian Agri-tech companies. These players are responding to the need for improved horticulture produce, dairy, poultry, and Agri-input supply chains, as well as for the easing of fair-trade transactions within the food business.

The market exhibits fragmentation in terms of market participants and is characterized by a diverse startup ecosystem that specializes in various agricultural sectors and technology including precision farming, supply chain management, farm management software, and market linkages. Industry players are strategically targeting small farms with limited access to costly mechanized equipment. Additionally, they are focusing on younger farmers who possess digital literacy and a solid educational background, enabling them to understand and benefit from precision agriculture and the use of Internet of Things (IoT) in agriculture. The increasing share of government on health expenditure will eventually reduce the out-of-pocket healthcare expense for the population in India by 2050. The Indian government has promised to spend 2.5% of India's gross domestic product (GDP) on healthcare by FY 2025.

Market segments:

Based on the application of Agri-tech in different sectors of agriculture, the market is segmented into food crops, fiber crops, cattle and dairy, poultry, and aquaculture. The food crops segment continues to hold most of the market in 2023 and 2028. This is due to the increased use of technology in agriculture and the rising demand for food to support a growing population. Over the course of the projected period, the need for technology solutions in the cattle and dairy sectors will rise, driving innovation to a greater extent and contributing to the decline in market share of the aquaculture and poultry categories. As a crucial link in the food production chain, dairy and cattle farming have drawn more attention recently due to technological improvements.

Market drivers:

Through digitalization and modern techniques, Agri-tech introduces fresh changes and innovations to traditional farming practices within the country. The surge in investments in the Agri-tech sector since 2018 has addressed challenges such as supply chain management, packaging, storage, payment systems, credit access, and agricultural advisory services in the farming industry. Startups in the Agri-tech sector, focused on precision agriculture and farm management, are aiding farmers in utilizing technology to boost their crop yields.

Key deterrents to the growth of the market:

The high cost of implementation of agricultural technology along with the rising inflation cost and the lack of digital literacy among the farmers acts as a major barrier to the adoption of Agri-tech in India. Indian farmers are price sensitive. The smooth transformation of traditional farming methods to advanced tech-aided methods requires sufficient training and support from the government and capital investments at the grass root level, which is still in a nascent stage.

Key market trends:

Precision agriculture practices are among the few nascent technology trends in the agriculture market in India. It leverages data and technology to enable farmers to make informed decisions. This type of agriculture involves the use of sensors, drones, automated machinery, data analytics, and GPS to increase the yield by providing real-time information on crop growth, soil moisture, and details on weather conditions. The trend is also supported by the government through its ~22 Precision Farming Development Centers (PFDCs) across India. Incorporating technologies such as artificial intelligence (AI) and machine learning (ML) into precision agriculture has significant potential to enhance and automate various farming procedures. CropIn, and BharatAgri are a few of the Indian companies that are providing precision agriculture solutions and are gaining a competitive edge in the market.