Budget Expectations on Agribusiness and Food Segment By K Vijayaraghavan Chairman, Sathguru Management Consultants & Partner
HYDERABAD: Indian agribusiness enterprises currently suffer from lack of new investments. The key agriculture productivity-enhancing segments such as the Seed sector, crop protection sector and farm mechanization have suffered from lack of new investments that is worth reflecting. Investment in innovation is insignificant due to the lack of risk capital flowing in this sector. The Billion Dollar plus invested is towards the e.Commerce platforms and retail networks without any significant incremental investment in farm productivity-enhancing inputs or food process capacity creation. The government commitment of investing 1.5 billion in early-stage companies through the sovereign Venture Fund focused Fund of Funds is largely deployed in e.Commerce and product aggregation investments. We do anticipate significant mortality for the start-ups for want of any scale up investment in innovation-intensive agriculture and food-related investments. For the last decade, we have denied every possible technology in agriculture due to impeding regulations and denial of product approvals. We foresee investment need of 1 Bn Dollar for the scale-up of investments in game-changing agriculture and life science start-ups that are currently left to exit without any investment flow for innovation validation and scale-up.
The government needs to see ways to ensure flow of early stage capital in agri and food ventures that are in the forefront of new innovation. Create a more accountable dispensation of the Fund of Funds investment in Funds that are sector focused in investments.
The government needs to unlock serious bottlenecks in regulations governing agri business. The National Biodiversity Act is a major bottleneck that cripples the agri input sector and agriculture research. The draconian act cripples investments in Indian seed sector and plant based process industry. Concerns of industry over the last decade to address the draconian provisions of this Act and the corresponding regulations remain unaddressed. The myriads of legal cases pending under this act deters any investor to make investments in this sector. Applied research focus for farm productivity is at a stand-still in public and private sector due to numerous restrictions imposed by the Act.
The potential for investment incentives in precision agriculture is enormous. The farm entrepreneurship has huge potential to attract significant investment in high throughput productive agriculture with youth engaging in farm entrepreneurship adopting contemporary high density farming. The focus on diversified horticulture crops and nutrition focused fruit orchards can bring competitive horticulture produce to feed the burgeoning retail network in the country and post-harvest processing opportunity.