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How will the Indian Agriculture sector create lucrative startup opportunities?

As part of economy revival measures, the Indian Govt. has announced key reforms in the agriculture sector. The recent measures announced by Finance Minister Nirmala Sitharaman to support, revitalize and liberalize, Indian agriculture sector are commendable. Along with benefits to farmers, it will also generate lucrative startup opportunities.

How it will be done?

Here, we discuss the key reform milestones mentioned by the FM and related startup opportunity.

  1. The Govt. amended Essential Commodities Act,1955 – which empowers the government to regulate the production, supply and distribution of commodities which it declares “essential”. With this Act, govt. can put restrictions on stock holding limits on wholesalers, retailers if necessary. The Govt. can also fix MRP of packaged products, declared as an essential commodity under this Act. An example – recently Sanitizer and 2ply-3ply masks declared essential commodities and 200ml hand sanitizer price fixed at Rs.100, same way for masks also prices are fixed.

With the amendment, cereals, edible oils, oilseeds, pulses, onions and potatoes will be deregulated and no stock limit shall apply to processors and value chain participants except in case of extraordinary events like national calamities, famine with a surge in prices. Therefore, now merchants can directly make a bulk purchase from farmers.

  • This step gives the opportunity for starting a business of cold chain or warehousing facility- for this category of startups, income tax benefit u/s 35AD is also available

     2. Operation Greens will be extended from tomato, onion and potato to all fruit and vegetables by providing 50 per cent subsidy on transportation and storage of these commodities.

  • This step gives the opportunity and encouragement to logistics, food processing startups like Paper Boat, Real fruit juice of Dabur, Fruit jam, juice, jelly makers.

3. APMC Act will also be amended. Agricultural Produce Market Committee (APMC) operates under the State Government and regulates the trading of notified agricultural produce and livestock. Farmers are required to sell their all agricultural produce through APMC only, and sales are made through auction.

With the APMC Act amendment, now farmers can directly sale to the processors,          aggregators, large retailers, exporters, etc in a fair and transparent manner. Farmers will now have more alternatives to sale their agricultural produce.

  • Along with farmers, this step will help the FMCG businesses, food processor companies like  Ramdev Masala, Aashirvaad atta etc.
  1. FM also announced to create ₹1 lakh crore agriculture infrastructure fund for funding Agriculture Infrastructure projects at farm-gate and aggregation points. Private entrepreneurs, startups who help by procuring from farmers and seek to create value addition for the global market, will benefit from the fund.
  • Startups like Big Basket, Grofers may get the benefit of this reform

Many other reforms to empower the Farmer and strengthen the agriculture sector are also announced.

With these reforms, Indian farmers, the agriculture sector and agribusiness ventures will see robust growth

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