Image Source : FILE PHOTO Budget 2023: What will Finance Minister Nirmala Sitharaman offer to agriculture sector?
Budget 2023: Agriculture has remained an intrinsic part of India’s economy for years, and the fast-gowing agritech sector is an extension of the agrarian revolution that the country pulled off in the past. The government pegs the number of agritech startups in India at over 2,000, which is a significant increase from 80-100 about 8 years ago. As the global agritech market inches closer to achieve a CAGR of 12% by 2027, India is certainly going to be a major contributor to this growth.
BUDGET 2023: FULL COVERAGE
The term ‘agritech’ was mentioned for the first time in the previous year’s Union Budget, which showcased the cognizance that the government has taken of the sector, listin it as an important category. And while there still lies a a major gap between what the market wants and what farmers produce, agritech sector is constantly working to bridge it through its tech-enabled, innovative approach. However, the industry, still in its nascent stage, requires greater support from the government.
With the upcoming budget announcement inching closer, agritech industry is hopeful that the government will extend its support through newer policies. We talked to prominent agritech leaders to curate an interesting collection of budget expectations from the sector.
Here’s what industry leaders are expecting from Budget 2023:
Dr. Deepak Birewar, chairman & MD, Inventys Research Company
The approaching Budget 2023 marks the arrival of the last full-year budget from the union government, which is expected to usher in favourable legislative policies to help grow the sixth-largest chemical producing country in the world. This year, we expect positive momentum towards formulation of the PLI scheme for the chemical sector to encourage domestic manufacturing. With exports of chemical and petroleum products to more than 175 countries standing at a staggering $8.24 billion, we expect the government to implement export benefits for specialty chemicals to aid the overall economy. Manufacturing business tax exemptions provided by DSIR, under section 35 (2AB) of the IT Act 1961, stands at 100%, compared to the 150% prior to March, 2020. A revision in this tax structure could empower firms to increase R&D expenditure, helping them produce new products and technologies. Additionally, the government can create a Models Specialty Chemical Manufacturing Region in Vidarbha, which could give rise to 3000 MSMEs in the region, with a petrochemical complex acting as a catalyst for industrial growth.
Further, the chemical sector is highly capital intensive with long pay back periods. Capital expansion of the chemical sector could be enabled if the government provides subsidies of 10%-20% for investment projects beyond Rs. 100 crore. In the past months, the shift of global supply from China has increased outsourcing opportunities and domestic demand. It has given India more expansion opportunities. By 2025, the Indian chemical industry is expected to reach $300 billion, and focused assistance in export benefits, tax advantages, and capital subsidies will further add thrust to the ongoing growth.
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Dhruv Sawhney, COO and Business Head, nurture.farm
More than 50% of the population in India depends on agriculture for their livelihoods. Agriculture is also the 3rd most significant contributor to our GDP and will always attract attention in the union budget. However, unlike previous years, we are moving into 2023-24 with a cautious and uncertain outlook owing to challenges like a looming recession, the Russia-Ukraine war, threats of climate change, falling export numbers, global inflation in crude, edible oil, and wheat prices. A separate budget allocation to improve crop production efficiency and enhancement of the supply chain can improve benefits to the farmers.
Policies to support technology adoption and digitisation of agriculture at scale, technology interventions, mechanisation, GIS, IoT, AI/ML, big data, blockchain, drones etc., can act as critical drivers to propel growth, farm efficiency, and improve production efficiency at scale. The government can expand the existing measures like digital agriculture mission (2021-2025) to include these technological interventions that help deliver market and mandi prices, supply chain visibility, food security etc.
Furthermore, the government should support the creation of an open ag ecosystem that acts as a public data library wherein all parties can share and access information and insights around soil wellness, pests and diseases etc to help fasttrack the change. The government can look to promote and open opportunities for PPP (Public Private Partnerships) to improve accessibility and truly bring in digitisation at grassroots level.
Benefits, incentives and investments to solve climate change
A clear definition of the climate change sector needs to be drafted. Incentives and tax benefits for domestic companies that focus on solving climate change can be offered. Creating a well-regulated voluntary carbon markets framework with policies and incentives that help India meet its Net Zero goals. Policies that encourage farmers to implement sustainable & precision farming practices can be drafted and implemented. Financial benefits and subsidies for the farmers set aside by the government can be routed via agritech companies & organisations promoting sustainability cultivation practices at a grassroot level to propel a shift towards climate smart farming practices at scale.
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Vicky Dodani, founder of Agrizy – “The agriculture industry contributes significantly to the Indian economy; the Indian government is aggressively encouraging as many people as possible involved in this area to incorporate digitalization. The approach to lessen farming’s impact on the environment and the impending economic recession in some areas is to digitize the agricultural sector. Because of this, we anticipate businesses and governments all over the world to increase their technology investments in agriculture, leveraging developments in cloud computing, earth observation, remote sensing, data, and AI/ML models, to help the industry unlock new possibilities and address current agricultural issues. This can greatly increase the production of food, increase profitability, and lower operating expenses, all of which are essential for sustainability. In September 2021, the government launched the Digital Agriculture Mission 2021–2025. As part of this mission, five memorandums of understanding (MoUs) were established, all of which intended to advance digital agriculture initiatives in the nation.
In India, there is a major gap between what the market wants and what farmers produce. This gap needs to be solved to achieve the Government’s declared target of doubling farmer profitability. The agrifood processing industry plays a major role in filling this gap by increasing the shelf life and thereby reducing the wastage. India has a long way to go in this regard. For e.g. only 3% of the total F&V output is actually processed in the country which is much lesser than some of the developed economies. Recent market research assessments predict that the worldwide agritech market will expand between 2020 and 27 at a compound annual growth rate (CAGR) of 12%. Along with the US and China, India is a competitor in this market.”
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