Context: Recently, the government of India is planning to launch the “Agri Fund for Startups & Rural Entrepreneurs” (AgriSure), a Category-II alternative investment fund with an initial corpus of Rs 750 crore. This initiative aims to support innovation in agriculture and address key challenges in the sector.

Agri Fund for Startups & Rural Entrepreneurs

• The Government launched the AgriSURE to support start-ups and agripreneurs through investments in sector-specific, sector-agnostic, and debt Alternative Investment Funds (AIFs), as well as direct equity support to start-ups working in Agriculture and allied sectors 

• This initiative aims to foster innovation and sustainability in India’s agricultural sector through the establishment of a Rs 750 crore Category-II Alternative Investment Fund (AIF). 

• The fund will offer both equity and debt support, specifically targeting high-risk, high- impact activities in the agriculture value chain.

• Objective: To provide comprehensive support to agripreneurs by establishing a financing ecosystem that offers both equity and debt options, enhances the farm produce value chain, creates rural infrastructure, generates employment, and supports farmers’ producer organizations.

• Funding Pattern: The initial corpus of Rs 750 crore, funded by the Ministry of Agriculture, NABARD, and other financial institutions, is managed by NABVENTURES, a wholly owned subsidiary of NABARD.

Challenges faced by agriculture sector in India

• Vulnerability to Climate Change: India’s agriculture is increasingly susceptible to climate change impacts and severe weather conditions

• Ecological Stress: The ICRIER (Indian Council for Research on International Economic Relations) paper highlights ecological stress in Punjab and Haryana from surplus paddy production, resulting in soil degradation, water depletion, and methane emissions from flooded rice fields contributing to greenhouse gas emissions.

• Low Productivity: Agriculture is India’s largest source of employment but has the lowest labor productivity of any sector.

• Financing Challenges: Securing funding for agri-startups is still challenging despite past government efforts.

• Lack of Technology Development: Despite having over 40 universities focused on agriculture and related fields, there is a lack of indigenous technology to tackle critical agricultural challenges.

Significance of AgriSure

• Using information technology in agriculture will boost labor productivity and increase income and profits for small and marginal farmers, who constitute 85% of the farming population.

• As food prices have been a major factor in inflation, boosting agricultural productivity will enhance food availability at affordable prices and ease pressure in macroeconomic management.

Road Ahead

• Priority Areas for Funding: The fund should prioritize startups that develop crop varieties resilient to extreme weather, such as drought and heavy rain, and promote agricultural practices that improve water and nutrient efficiency.

• Water-Efficient Crop Development:There is a need to develop water-efficient crop varieties, especially paddy and wheat, with shorter growth cycles to improve agricultural outcomes.