Start-ups’ in Indian Agriculture and Their participation in global value chains: Effects on income and employment: An economic analysis

Introduction

The Indian agricultural sector continues to serve as the primary source of livelihood for nearly 45 per cent of the country's population, has historically been plagued by low productivity, fragmented landholdings, market volatility, and inefficient supply chains (Birthal PS 2005) [3] . Despite India's significant contribution to global food production, its share in high-value global agricultural trade remains disproportionately low. Over the past decade, a transformative shift has emerged with the rise of agri-startups and innovation-driven enterprises that apply modern technologies and business models to address critical bottlenecks across the agricultural value chain (Suresh et al 2024) [12] . Witnessing remarkable growth, India's agri-startup ecosystem surged from fewer than 100 ventures in 2015 to more than 4,000 by 2024, achieving a compound annual growth rate (CAGR) of over 20 per cent (Kumar et al 2024) [8] . These startups operate across areas such as precision agriculture, post-harvest management, input delivery, digital platforms, supply chain management, traceability solutions, and agri-fintech, reflecting technological penetration in rural India. The emergence of agritech startups is driven by several converging factors like government support (e.g., Startup India Mission), increased venture capital, expanded digital payment systems and wider smartphone use in rural areas and increasing demand for safe, sustainable, and traceable food globally (Singh & Misra (2023) [10] . A significant development within this ecosystem is the growing participation of Indian agristartups in Global Value Chains (GVCs). GVCs refer to the international production networks wherein agricultural products are cultivated, processed, certified, marketed, and consumed across borders, with value addition occurring at each node. Participation in GVCs requires compliance with rigorous international standards (e.g., GLOBALG.A.P, HACCP and Codex Alimentarius) and placement with global consumer preferences for organic, sustainable, and ethically sourced products (Sharma & Arora 2023) [9] . Empirical evidence progressively suggests that GVC-linked agri-startups not only improve farm gate prices but also generate higher rural employment, especially among youth and women, while reducing post-harvest losses and enhancing bargaining power across the supply chain (Adhya and Sahoo, 2022) [1] . They also facilitate financial inclusion through digital lending platforms and promote environmental sustainability by encouraging low-input, high-efficiency farming practices. However, the participation of agri-startups in GVCs is still regionally concentrated and sectorally skewed, with challenges such as certification costs, logistics bottlenecks, export registration delays, and lack of skilled labor hindering broader engagement (Gulati et al 2022) [5] . This study undertakes a critical economic analysis of the role played by agri-startups in integrating Indian agriculture into GVCs. It explores the effects of such participation on income enhancement, employment generation, value chain modernization, and export diversification. Drawing on secondary data, case studies, and startup-level insights, the paper presents disaggregated trends across product categories, states, and startup models. It also analyzes investment flows, export potential, compliance requirements, and policy gaps that influence the performance and scalability of these enterprises in international markets. By quantifying the economic impacts of startup-GVC integration, this research contributes to the policy discourse on doubling farmers' income, fostering rural entrepreneurship, and building globally competitive agricultural systems. The findings are intended to support stakeholders including policymakers, development agencies, investors, and agri-entrepreneurs in designing targeted interventions to promote sustainable, inclusive, and export-oriented agricultural growth in India. The growth is attributed to schemes like RKVY-RAFTAAR, Agri-India Hackathon, and financial incentives from incubators like Manage-CIA, NAARM-AIDE, and ICRISAT-AIP. The increased awareness and entrepreneurial activity among rural youth has further propelled this positive trend. The data reveals a compound annual growth rate (CAGR) of over 35 per cent, signalling a booming ecosystem. The sharp increase post-2018 aligns with government interventions such as the RKVY-RAFTAAR incubation scheme, which provided seed funding and mentoring to initial stage start-ups. The flow between 2020 and 2022 can also be partly attributed to COVID-19 disruptions, which exposed vulnerabilities in traditional agrivalue chains and opened new opportunities for digital, decentralized solutions. However, the slowing growth rate from 2022 to 2024 suggests a maturing ecosystem that is gradually shifting focus from quantity to quality and sustainability of projects. that market inefficiencies and post-harvest losses remain foremost agony fact in Indian agriculture. Startups like Ninjacart have revolutionized farm-to-market logistics, cutting down postharvest losses by over 30 per cent in some regions. Precision agriculture, though still emerging, shows promise in regions like Punjab and Telangana where drone-based spraying and sensor-based irrigation are being adopted. However, its higher investment limits adoption among marginal farmers, reinforcing the need for custom hiring centers and subsidies. Agri-fintech is an emerging segment that addresses financial inclusion, a persistent bottleneck in rural India. Startups like Samunnati provide collateral-free loans using AI-based risk profiling, which can significantly reduce dependence on informal credit. This table illustrates the geographical spread of agri-startups across Indian states, with a focus on their engagement in GVCs and dominant operational domains. Maharashtra, Karnataka, and Telangana lead in the number of start-ups, benefiting from better infrastructure, proactive state policies, and proximity to markets and ports. Telangana shows the highest GVC participation (72 per cent), probable due to its strong digital infrastructure, block chain integration, and traceability mechanisms which are essential for international markets.

Objectives of the study

Functional Domains and Start-up Innovations

Regional Patterns and GVC Participation

States like Madhya Pradesh and Rajasthan have lower GVC participation (below 40 per cent), signifying either infrastructural gaps or lesser integration with export-oriented or multinational agri supply chains. Others (Combined) includes smaller or North-eastern states, which account for 458 start-ups but only 36 per cent are GVC-linked often due to remoteness and limited trade logistics. This table highlights regional disparities in start-up spread and GVC integration, reflecting policy gaps, resource endowments. The Indian agriculture sector witnessed a robust growth phase between 2018 and 2021, with investment surging nearly fourfold from USD 66.3 million to USD 250.2 million. This remarkable increase reflects delicate investor confidence, driven by extensive digital transformation, supportive government initiatives such as Start-up India and the Agri Infrastructure Fund, and the emergence of scalable agritech business models. Investor loyalty is evident through consistent participation from firms like Omnivore across multiple years, signalling sustained interest and faith in the Indian agritech landscape. Other repeat investors, including Ankur Capital, Sequoia, and Accel, further underscore deepening sectoral involvement. The COVID-19 pandemic between 2020 and 2021 augmented existing vulnerabilities in traditional agricultural supply chains, making farm-to-fork models, cold chains, and digital traceability urgent focus areas by 2021. Investors responded tactically by backing startups that were developing resilient, tech-enabled systems, consequently pushing 2021 to become the highest investment year recorded thus far. Following this peak, the period from 2022 to 2024 saw a phase of stabilization. Although 2022 witnessed a drop in investment to USD 178.4 million, this shift indicated a transition towards high-risk, high-return innovation, with a pivot towards deep-tech applications such as drone technology, climate-smart agriculture, and AG-biotech. A slight rebound in 2023-2024, with investments hovering around USD 200-215 million, suggests market consolidation. This period also saw a notable shift towards post-harvest technology, agronomy services, and Global Value Chain (GVC) facilitation, aligning with India's increasing focus on export readiness and value chain integration. Overall, the sector is driven by government support, technological adoption (AI, ML, IoT), and a focus on improving efficiency and market access for farmers, with a growing international presence. Obtaining necessary certifications (like IEC, RCMC, and product-specific quality standards) is crucial for successful agri-exports from India.

Investment Patterns and Sectoral Allocation

Export Orientation and Certification Barriers

Income and Employment Impact

 Startup Concentration and GVC Participation:

Maharashtra, Karnataka, and Andhra Pradesh are leaders, contributing approximately 33% of all agri-startups. Maharashtra stands out with 410 startups and a 52 per cent GVC integration, highlighting its strong export infrastructure. In contrast, Uttar Pradesh and the Rest of India show weaker GVC participation (30 and 28 per cent respectively), possibly due to poorer infrastructure and limited export linkages. Overall, around 37 per cent of Indian agri-startups are involved in GVCs.  Farmer Income: States with higher GVC participation, such as Maharashtra, Punjab, and Andhra Pradesh, also report higher average farmer incomes. Punjab leads with ₹3.05 lakh, potentially due to high-value crops and exportfocused start-ups. Uttar Pradesh and the Rest of India have lower incomes (less than ₹2 lakh), correlating with their limited GVC integration. This suggests a positive link between start-ups, GVCs, and improved farmer income through better pricing and market access.  Employment Generation: Agri-startups create significant employment. Maharashtra alone accounts for 12.6 per cent of direct jobs (around 4,200). Rest of India contributes the most indirect jobs (23,000), likely due to a wider distribution of start-ups. On average, each agri-startup generates 10-11 direct jobs and 22-23 indirect jobs, demonstrating their substantial employment elasticity. In total, agri-startups have created 33,400 direct jobs and 70,700 indirect jobs.  Regional Disparities: Southern states (Karnataka, Andhra Pradesh, and Telangana) generally outperform Northern and Eastern states in GVC participation and income impact. Uttar Pradesh, despite its agricultural output, lags in startup quality and GVC integration, indicating a need for policy interventions focused on incubation, digital platforms, and export readiness in such regions. Different types of agricultural startups in India contribute in unique ways to Global Value Chain (GVC) participation, farmer income, employment, and exports. Organic & Natural Foods are highly integrated into GVCs (62 percent exposure) and show the most significant farmer income growth (34 percent) and a strong export contribution (51 percent). This is largely due to the global demand for certified organic products. Agri-Logistics & Exports startups are the biggest drivers of exports (63% contribution), with 55percent GVC integration. They help reduce post-harvest losses, leading to improved farmer earnings (28 percent) and notable job creation (38 percent). Food processing start-ups also have a strong GVC presence (58 percent) and a significant share in exports (47 percent). They are particularly effective at creating rural employment (36 percent) and adding value to farm produce. Digital Marketplaces have moderate GVC exposure (47 percent) and primarily impact domestic trade. While they improve market access and generate employment (41 percent), their contribution to exports (18 percent) is lower. Finally, Precision Agri-Tech start-ups currently have low GVC exposure (39 percent) and a limited export contribution (12 percent) due to high costs and slow adoption. However, they do support income and employment through technology-driven solutions.

Key Challenges in GVC Integration

Conclusions

The analysis reveals that agri-startups are a transformative force in Indian agriculture, significantly contributing to its integration into Global Value Chains (GVCs). Their growth, exceeding a 20 percent CAGR since 2015, has been fuelled by government support and increased investment, leading to innovations across precision agriculture, supply chain, and agri-fintech. Crucially, participation in GVCs through these start-ups directly correlates with higher farmer incomes and substantial employment generation. States with strong GVC integration, such as Maharashtra and Punjab, show higher average farmer incomes. Nationally, agri-startups have generated an estimated 33,400 direct and 70,700 indirect jobs. However, scaling this integration faces persistent challenges, including inadequate infrastructure, stringent international compliance, fragmented landholdings, and limited access to finance. Despite these hurdles, the rising global demand for organic produce and the increasing adoption of digital technologies present significant opportunities for future growth. Targeted policy interventions are essential to address existing

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