The Indian government’s commitment to invest Rs 100 crore ($16.6 million; €12 million) into a number of agriculture technology initiatives in the country does not go far enough, according to agtech investor Mark Kahn, founder and partners at Omnivore Partners, a Mumbai-based venture capital firm.
As part of the national budget announcement in early July, Arun Jaitley India’s finance minister, announced the establishment of the Agri Tech Infrastructure Fund for this end, although further details about how the fund will work have yet to be disclosed.
“This Rs 100 crore fund seems like a token amount given the huge challenges facing Indian agriculture,” said Kahn. “Just for comparison’s sake, Omnivore’s [agtech fund totals] Rs 260 crore, or just about $43 million.”
Although when looked at beside other initiatives by the government, it is a step in the right direction, he added.
“I think this government has excellent intentions with respect to agriculture and rural development, more so than any Indian government in the last three decades,” Kahn told Agri Investor adding that the government’s funding of agriculture through other channels is more significant; the finance minister also announced a Rs 10,000 crore investment into start-up companies with specific attention to agriculture and manufacturing.
“I believe capital available for agtech start-ups is going to increase dramatically,” he added.
Investment into India’s agriculture sector is badly needed but the impact of the government’s policies will not be known for some time, according to Uday Garg, managing director at Mandala Capital, an Indian agribusiness fund manager.
“The Indian agtech market is very small in terms of access to financing and the number of companies,” he told Agri Investor. “It can’t just be one [fund] announcement, it needs to be a sustained effort.”
“It’s a tough one – [Rs 100 crore] is not a huge amount but [these policies] are all good announcements. We’ve just got to wait and see.”
Other areas in which the government has made positive moves includes approving GMO trials and the deregulation of the sugar industry, added Garg.
The government also announced the creation of the Rural Infrastructure Development Fund in the budget speech. The RIDF is a fund created by the Indian government and is financed by them in partnership with national banks such as the National Bank for Agriculture and Rural Development. These institutions will cover any of the shortfalls in financing the RIDF. The government is not expected to seek private investment partners for the RIDF at this stage.