Indian agritech: Can it overcome stunted growth?

Hello,

This week, the Torrent Pharma-JB Chemicals $3.1 billion merger was cleared, representing a sector-defining consolidation in pharma, and one of the largest M&A transactions this year.

Also, Kotak Bank completed due diligence on IDBI. If a purchase materialised, it could be an outlook-defining moment for the sector.

Meanwhile, Tata Motors’ Iveco deal led the investment charts in an exciting quarter for India’s auto M&A as the sector’s supply chains slowly consolidate. But Tata Motors PV (passenger vehicles) business slipped by 0.25% because of a cyberattack, as S&P Global revised the stock’s outlook to Negative.

And finally, Softbank-backed Lenskart said it seeks to raise $829m in an India IPO which may become the country’s largest consumer tech listing.

I hope you enjoy this week’s roundup — please connect on LinkedIn to discuss your next M&A deal.

Let’s dive in.

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Market Trends

The bitter taste of over-supply

This month, India’s government announced a ₹37,952 crore ($4.55 billion) fertiliser subsidy for 2025–26 to shield farmers from input costs, as record rice harvests languished in overflowing warehouses, pressuring domestic prices. 

Exporters struggled to find buyers of the unsold commodity in new markets such as Iraq, Indonesia and Saudi Arabia. Soybean‑meal exporters also failed to compete with global suppliers’ value chains and crusher margins. 

Government subsidies cushion farmers but repel global private equity appetite. Many agritech investors pulled back this year, reducing rounds and cheque sizes versus 2024 as early stage funding slowed. 

Global capital concentration by region 

A key industry

Agriculture anchors India’s economy, employs nearly 43% of the workforce, contributes about 17–18% of GDP, and underwrites the country’s food security, rural incomes and inflation stability. 

Every fluctuation in farm output or fertiliser prices ripples through the consumer basket. It also shapes India’s export earnings from rice and cotton to spices and marine produce, determining how much disposable income circulates in rural markets that drive demand for two-wheelers, housing, and FMCG. 

In short, farm policy isn’t just about farmers; it’s the foundation of India’s growth and macroeconomic balance. But it’s not hard to see the sector is lagging.

Investors see an underbuilt agritech market. Indeed, PE/VC interest fell from roughly $24.4bn in 2020 to about $17bn in 2022, as capital deserted India for the US and China.. 

This map shows the US/China concentration and India’s smaller share, showing the challenge facing the country’s start-ups when competing with counterparts in larger markets.

The instrument mix constrained innovation

Indian farmers relied on loans and public budgets as equity abandoned India’s innovators. Debt finance figured at 66.8%, while government cash accounted for about 28.5%. Equity and other instruments together contributed a tiny sliver. 

In practice, this pushed capital into lower‑risk, revenue‑proximate plays rather than into Indian R&D or tech-led scale‑ups.

Where did the money go?

Within the private finance pool, commercial financial institutions accounted for about 99% of flows. This indicates private capital skewed toward credit products rather than VC equity and upstream R&D and irrigation as potential tech investments suffered. 

In conclusion, India’s agriculture capital (mostly government subsidies) reinforced existing models instead of underwriting the risk of introducing precision agriculture, sensors, data platforms, cold‑chain robotics or irrigation engineering. 

If policymakers rechanneled a share of subsidies and guarantees into outcome‑based investments, they might catalyse private investment into upstream agritech rather than merely providing current income flows.