Budget 2021: No agritech focus, startups pin hopes on agri-infra, credit allocations

Budget 2021: No agritech focus, startups pin hopes on agri-infra, credit allocations
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In the absence of specific initiatives for agritech businesses in the latest budget, startups in the sector hope to leverage the balanced focus on agri-infrastructure and capital flows to allied areas of value creation.

However, the agriculture sector, as a whole, received ample focus. 

Agriculture credit target was increased to Rs 16.5 lakh crore from the previous year’s Rs 15 lakh crore. This is expected to open opportunities for agri-fintech startups to build innovative agri credit products and services. The increased funding can incentivise technology startups to build specific initiatives to improve the farm-to-fork supply chains to boost farmer incomes and reduce food wastage. Mandi digitalisation is a huge opportunity as well.


The budget imposed an Agriculture Infrastructure and Development Cess (AIDC) on certain items, including petrol, diesel, gold and a few imported agricultural products as an immediate measure to improve agricultural infrastructure.

“There is an immediate need to improve agricultural infrastructure so that we produce more, while also conserving and processing agricultural output efficiently. This will ensure enhanced remuneration for our farmers,” finance minister Nirmala Sitharaman said.

The allocation for the Rural Infrastructure Development Fund has been increased from Rs 30,000 crore last year to Rs 40,000 crore, while the corpus for micro irrigation has been doubled to Rs 10,000 crore from Rs 5,000 crore. The copus of Rural Infrastructure Development Fund has also been increased from Rs 30,000 crore to Rs 40,000 crore. 


Investors and startups across the agricultural domain welcomed the measures, which are expected to strengthen the post-harvest infrastructure and improve farmer income.

“This is a balanced budget focused on the creation of relevant agri-infrastructure and capital flows to allied areas of value creation within agriculture viz dairy, animal husbandry, and fisheries,” Subhadeep Sanyal, partner at venture capital firm Omnivore, said. 

“Ample focus on startups via the Startup India and Stand Up India schemes will also help maintain the velocity of agritech startups to grow rapidly and positively impact farmers. Larger macro spending on capital expenditure on roads, ports, and railways will help produce reach markets faster and in better quality, helping all stakeholders make more money in the agri and agri processing sector," he said.


The benefits of the Agriculture Infrastructure Fund, which was introduced to mitigate the damage caused by the Covid-19 pandemic, has now been extended to the Agriculture Produce Marketing Committee mandis for augmenting infrastructure facilities.

The budget also expanded Operation Greens to 22 perishable products beyond tomato, onion and potato. Introduced in the 2018-19 budget, this initiative aims to promote farmer-producer organisation, strengthening agri-logistics, processing facilities and professional management.

The allocation for MGNREGA has been increased to Rs 73,000 crore in the latest budget from Rs 61,500 crore, while the centre has announced significant investment to create modern fishing harbours and fishing landing centres, with the target to raise fish production to 200 lakh tonnes by 2022-23.


However, the budget did not do much to facilitate liquidity for agri NBFCs. It offered no GST relief for agri services, tools, or dairy products. 

“It would be an additional advantage if a GST subsidy was announced for smart farm tools/services. The new trend of using IOT and internet technologies for aquaculture has to be supported by withdrawing/subsidized GST on the services or equipment. We also expected an announcement on a single widow lease system and a ‘market support fund’ as they could potentially boost rural entrepreneurship and increase our seafood exports share in imports market respectively,” Rajamanohar Somasundaram, CEO and founder of aquaculture company Aquaconnect, said.

Agritech startups also await clarity on the vehicle for delivery of agri-infrastructure funds and how these funds will reach the last mile. 


An increase in cash transfer under the PM-KISAN scheme was expected. However, the allocation for the scheme dropped 13% or Rs 10,000 crore, compared to the initial allocation of Rs 75,000 crore last year.

Notably, there was no mention of research and development (R&D) investments or skill development for the agri sector. The government also overlooked the need to create special programmes to improve technology adoption in farming.

Views from agritech entrepreneurs


Maithili Appalwar, CEO of Avana, a for-profit social enterprise developing affordable technologies for smallholder farmers: With agriculture taking centre stage in this year’s budget, we appreciate the government’s pragmatic measures of an influx of Rs 10,000 crore as part of the micro irrigation corpus fund, a double since last fiscal. Announcement of the agriculture credit target of Rs 16.5 lakh crore for FY22, green scheme as well as an increase provision to rural infra development fund to Rs 40,000 crore from Rs 30,000 crore will ensure the spur in development and growth for farmers. 

Prasanna Rao, co-founder and CEO of agri-serves firm Arya: It is a good budget, which continues to keep the pace of reforms going and looks at increasing capital expenditure to keep the economy growing without meddling with direct tax or adding any Covid related cess or tax. The focus on agri and rural infra through enhancement of the rural infrastructure scheme is encouraging. The extension of AIF to APMCs is a step in the right direction and gives them an opportunity to strengthen themselves to attract farmers and new private buyers. We also welcome the one-year extension on tax holiday for startups. 

Taranjeet Singh Bhamra, CEO and founder of agri-analytics startup AgNext: This budget mainly focuses on upgrading the post-harvest infrastructure like mandis (APMCs), warehousing, logistics and promoting Digital India by integration of 1,000 more mandis to e-NAM platform that will benefit stakeholders to gain more access to markets.  Newly introduced agri-cess on certain commodities will add on more to the infrastructure fund.

Rajamanohar Somasundaram, founder of Aquaconnect: Focus on ensuring increased credit flows to animal husbandry, dairy, and fisheries is a welcome move. Increased agricultural credit target to 16.5 lakh crores in FY22 will get more liquidity in this sector. Allocation of 42% more funds under PMMSY (Prime Minister’s Matsya Sampada Yojana) scheme and 30% rise in grants-in-aid to state government is really a positive approach.

Nikhil Das, founder of agritech startup Agdhi: The central budget has shown confidence in the Minimum Support Price (MSP) regime and has upheld it for the farmer. The budget has promised 1.5 times MSP against the cost of production across all commodities. This is likely to bring in more innovation and adoption of technology in farming.

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