AgriTech Sector

India is one of the world’s largest agricultural economies, with agriculture contributing approximately 18% to the GDP and supporting over 55% of the population. The country has the 10th largest arable land resource and boasts 46 out of 60 major soil types globally, making it a prime location for AgriTech advancements.

Despite this potential, Indian agriculture faces challenges such as fragmented land ownership, water scarcity, poor storage infrastructure, inefficient market linkages, and limited financial support. AgriTech—the integration of technology in agriculture—offers innovative solutions to these problems through digital platforms, AI-driven farm management, precision farming, and supply chain enhancements.

The AgriTech industry in India is rapidly growing, with over 450 AgriTech startups and an annual growth rate of 25%. Investment in the sector has surged, with foreign direct investment (FDI) inflows of over $9.08 billion between 2019 and 2020. India’s AgriTech market potential is projected to reach $24.1 billion within five years, making it a lucrative space for entrepreneurs, investors, and corporate entities.

Legal and Regulatory Framework Governing AgriTech in India:

For AgriTech startups and investors, understanding the legal and regulatory framework is critical. The AgriTech sector operates at the intersection of agriculture, technology, data protection, trade, and finance, requiring compliance with various laws and regulations.

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020

• Liberalizes agricultural trade by overriding state-level Agricultural Produce Market Committee (APMC) regulations.
• Facilitates barrier-free inter-state and intra-state trade of farm produce.
• Enables digital trading platforms for agricultural commodities, enhancing transparency and market efficiency.

The Essential Commodities (Amendment) Ordinance, 2020 & Essential Commodities Act, 1955

• Deregulates key agricultural commodities, reducing government intervention in pricing and stock limits.
• Encourages investment in agricultural infrastructure, cold storage, and AgriTech solutions.

Information Technology Act, 2000 & Data Protection Rules

• AgriTech companies handling farmer data must comply with Section 43A and Section 72A of the IT Act.
• Regulations on data security and privacy apply to digital platforms providing agricultural financial services, farm analytics, and precision farming solutions.

Intellectual Property (IP) Laws

• Patent protection for AgriTech innovations including AI-based farming solutions, drones, and IoT-driven agricultural tools.
• Trademark and copyright protections for AgriTech brands, software, and proprietary data analytics.

National Drone Policy, 2018

• Regulates the use of drones in agriculture for crop monitoring, soil analysis, and aerial seeding.
• AgriTech companies must obtain DGCA approvals and Remote Pilot Operator (RPO) permits for drone-based farming applications.

Foreign Exchange Management (Non-Debt Instruments) Rules, 2019

• 100% FDI permitted in certain agricultural activities under the automatic route.
• Simplifies the investment process for foreign investors and AgriTech companies seeking to enter India’s agricultural sector.

Contract Farming & Agri-Finance Laws

• The Model Contract Farming Act, 2018 allows pre-agreed pricing contracts between farmers and AgriTech companies.
• Financial regulations govern agricultural lending, supply chain finance, and digital credit platforms for farmers.

Key AgriTech Segments & Market Growth:

The AgriTech sector in India is experiencing a surge in technology-driven innovations, categorised into the following segments:

1. Supply Chain & Output Market Linkages ($12.0 billion) – Digital marketplaces, B2B platforms, farm-to-fork models.
2. Agri-FinTech & Credit Services ($4.1 billion) – Agri-loans, insurance, digital payment solutions.
3. Precision Agriculture & Farm Management ($3.4 billion) – IoT-driven monitoring, AI-based analytics, drone technology.
4. Quality Management & Traceability ($3.0 billion) – Blockchain-based traceability solutions, farm produce authentication.
5. Agri-Inputs & Market Linkages ($1.5 billion) – Digital platforms for seed, fertiliser, and equipment procurement.

Government Initiatives Driving AgriTech Growth:

The Indian government has introduced several initiatives to support AgriTech startups, investors, and corporate entities:

• National Agriculture Market (eNAM) – A pan-India online trading portal that connects farmers with buyers and provides transparent pricing mechanisms.
• Agricultural Export Policy, 2018 – Aims to increase agricultural exports to $100 billion with a stable trade policy regime.
• Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) – Focuses on water conservation, irrigation efficiency, and smart water management technologies.
• Custom Hiring Service Centers (CHC) – Farm Machinery App – Enables farmers to rent agricultural machinery via a digital platform.
• $5,000 crore NABARD grant – Supports the digitalization of 35,000 Primary Agricultural Credit Societies (PACS) to enhance rural credit access.
• Transport and Marketing Assistance (TMA) Scheme – Provides financial assistance for agricultural exports, facilitating global trade partnerships.
• Agri-Udaan Startup Accelerator – A government-backed initiative for scaling Food & AgriTech startups through mentorship, investor networking, and industry collaborations.

Legal Challenges & Compliance Risks for AgriTech Companies:

While AgriTech presents significant opportunities, companies must navigate legal and regulatory challenges:

1. Land Ownership & Contract Farming – Ensuring legal compliance in farmland leasing, contract farming agreements, and cooperative farming models.
2. Digital Agri-Finance Compliance – Adhering to RBI regulations on digital lending, farmer credit scoring, and online agricultural transactions.
3. Data Privacy & Cybersecurity – Securing farmer data, AI-based crop analytics, and transaction records from cyber threats.
4. E-commerce & Agri-Market Regulations – Compliance with e-commerce laws for direct farm-to-consumer (F2C) business models.
5. Cross-Border Trade Regulations – Ensuring export compliance for agricultural commodities and international trade laws.

The Future of AgriTech in India:

The AgriTech sector is poised for exponential growth, with increasing smartphone penetration, affordable data access, and digital platforms driving market expansion. Key trends include:

• AI & Big Data Analytics – Enabling predictive farming, crop health monitoring, and yield optimization.
• Blockchain & Smart Contracts – Improving supply chain transparency and reducing fraud in farm produce transactions.
• Integration of AgriTech & E-commerce – Large retailers and online grocery platforms entering direct farmer sourcing models.
• Government Policy Reforms – Potential introduction of single mandi tax for agricultural trade to streamline interstate commerce.

Conclusion:

The AgriTech industry in India offers unparalleled opportunities for startups, investors, and corporate players. With supportive government policies, digital transformation, and increasing capital inflows, AgriTech is set to become a dominant force in India’s agricultural sector.

At Candour Legal, we provide specialised legal advisory services for:

• AgriTech startups & investors> –</strong Company formation, FDI structuring, compliance.
• Agri-commerce & supply chain – E-commerce regulations, digital trading compliance.
• Agricultural contract farming – Drafting agreements, resolving land ownership disputes.
• Data privacy & technology law – Compliance with data protection laws in AgriTech platforms.

For expert legal counsel in the AgriTech sector, contact Candour Legal – Your Trusted Legal Partner in India’s evolving agricultural technology landscape.