Anand Ramanathan, Partner, Deloitte India
India is an agrarian economy with agriculture and its allied sectors being the largest source of livelihood in the country. It is estimated that India can generate USD 813 billion in revenue with an investment of USD 272 billion in agritech and allied segments by 2030.
The Indian agricultural sector is slowly shifting from traditional farming to horticulture and livestock production. The demand for fresh and processed food products is also increasing due to the rise in income levels, urbanisation and changing consumption habits.
The government has announced several policies, schemes, and programmes, such as a Production Linked Incentive (PLI) scheme to boost the food processing sector, Krishi UDAN 2.0 scheme for facilitating and incentivising movement of agri-produce by air, a composite portal to provide agricultural marketing-related services through a single digital platform etc.
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To ensure the players in the sector derive the benefits of the schemes and operate efficiently, it would be helpful for the government to work on specific areas such as ease of doing business, creating policies to support technology development and adoption, and building infrastructure to optimise the food and agribusiness supply chain.
Policy can also facilitate demand generation and marketing of produce to generate greater levels of income and adjust production with demand. Promotion of investments in the sector along with a policy push can enable the transformation of agricultural practices and ecosystem.
1. Ease of doing business to accelerate sector growth
As the demand for allied sectors such as food processing, horticulture, livestock production, organic farming, smart proteins, floriculture, dairy, nutraceuticals is increasing, it is important for the government to make budgetary allocations and develop monitoring mechanisms to support implementation on the ground.
Refinement of single-window mechanisms with dedicated application filing, processing, and tracking support across the states to create a “one-stop shop” for approvals and clearances will help improve the ease of doing business. This will enable players to quickly avail scheme benefits and facilitate investors and entrepreneurs to obtain approvals as well as clearances for expanding their business across India.
The government should provide a user-friendly portal with multi-language support to serve as a single point of information to educate players about the various schemes and policies that are already in place for the sector.
In addition, to facilitate the growth of agri exports, the government should look at easing the documentation process, incentivising international tie-ups, educating stakeholders about the best practices in agriculture and manufacturing, the latest international standards in quality and packaging, and implementing food safety and traceability systems required by the importing countries. These measures will boost Indian exports and promote the development of agriculture and its allied sectors.
2. Government policies to support technology development and adoption
The evolution of digital technologies such as artificial intelligence (AI), machine learning (ML), remote sensing, big data, block chain, IoT, GIS technology and use of drones and robots is transforming agricultural value chains and modernising operations. Currently, the adoption of these digital technologies in India is still in its infancy due to limited penetration of mechanisation tools, lack of awareness and the presence of segregated small-holder farms.
To support and accelerate the development and adoption of new technologies, the government has launched the Digital Agriculture Mission (2021–2025). The government can further support this by accelerating digital infrastructure, technology affordability, ease of access and operations, easy maintenance of systems, educating stakeholders and formulating supportive government policies.
In addition, the government should also focus on developing an ecosystem to facilitate the delivery of digital services to farmers, such as an ‘Agristack’ for providing real-time, accurate market information, scheme information, logistics and warehouse information, access to markets (e-NAM & marketing channels) and also serve as a farmer database (soil condition details, crop details, land records etc.) across states.
The government should also focus on policies to strengthen farmer producer organisations (FPOs) as they play a crucial role in driving the adoption of best practices. Digital technologies also enable better and prompt member management, financial management and transparency of data among all stakeholders.
In addition, public-private partnerships are crucial for the adoption of digital technologies in agriculture and its allied sectors. The government can further incentivise and encourage organised players to help modernise the sector.
Further, the government can provide low-interest loans, tax incentives, etc. to encourage start-ups to develop innovative solutions to help modernise the sector. These agri-tech start-ups can fast-pace the country’s march towards building a more resilient agricultural ecosystem, improve accessibility for smallholder farmers and train them in best practices and sustainable solutions.
3. Building infrastructure to optimise the food and agribusiness supply chain
With the emergence of new allied sectors such as food processing, horticulture etc, the sector needs to transform supply chains and operating models to become more flexible, adaptive, and resilient. Efficient management of food products by creating a network of advanced primary processing, storage and distribution facilities could add value to the products, reduce losses and enhance the revenue of key stakeholders.
The government should push policies to provide attractive incentives for building facilities such as micro cold storages etc to address supply chain issues such as lack of proper storage infrastructure, inadequate logistics, high levels of wastage etc.
Further, the government should look at providing financial incentives, training, infrastructure, and marketing facilities to entrepreneurs for setting up businesses such as food processing and milk processing plants. In addition, the government should increase investments aimed at improving infrastructure such as irrigation facilities, logistics, warehousing, and silo storage facilities across the states.
4. Increase focus on creating awareness and developing market linkages
For the growth of agriculture and its allied sectors, it is important for the government to focus on providing training, financial assistance, and creating awareness on schemes and best practices such as crop diversification, organic farming etc.
In addition, the government should look at developing market linkages through a nationwide portal/app (e-mandis) such as the farm gate app developed by the Madhya Pradesh government, which will provide market price information as well as provide an assured buyback arrangement for farmers while providing a platform for companies to buy the produce.
These e-mandis will facilitate buying and selling of agricultural produce without having to visit mandi premises. Also, these measures will help in developing new markets for all the stakeholders.
Setting up marketplaces focused on FPOs will also help drive demand and result in greater price realisations for farmers. India will also increasingly play an important role in shaping the food security agenda for the Indo-pacific and this will present an opportunity for the food processing sector to explore a greater level of integration with countries in SE Asia, Africa and Middle East from an agribusiness standpoint.
Policy interventions on the supply side need to keep in step with demand generation for Indian produce and processed products in these geographies. Country/state level partnerships (Eg: the partnership between the UAE and Madhya Pradesh as part of the I2U2 grouping) for specific crop/commodity groupings will help secure demand, diversify cropping patterns and increase price realisations for farmers and other stakeholders in the agricultural ecosystem.
The writer is Partner at Deloitte India
