Dutch companies develop special solutions for the Indian agricultural sector

Agriculture in India has faced major challenges for years, but climate change is only compounding the problems for Indian farmers. Can European technologies provide a solution or are they simply too expensive for the Indian agricultural sector? Dutch agricultural technology companies Omnivent and Incotec explain how they are advancing the Indian agricultural sector and making money in India.

Damage caused by climate change

India's agricultural sector is experiencing increasingly widespread adverse weather extremes such as prolonged drought, flooding and salinization of farmland. Late last year, heavy rains destroyed over 800,000 acres of agricultural and horticultural crops in the southern states of Tamil Nadu and Andhra Pradesh, while in the northern state of Kashmir, apple farmers saw their crops fail for the third year in a row due to early snowfall. Consequently, if global climate change continues at the same rate, crop yields in India are expected to drop by 30 percent.

Machinery, refrigeration, logistics & credits

Indian farmers also face a variety of systemic problems such as a lack of sophisticated machinery, difficulties in obtaining credit and logistical problems in marketing their produce. On average, 30-40% of the total crop is lost due to lack of cold storage facilities and/or refrigerated transport, which leads to lower income for the farmers. The Indian agricultural sector is in dire need of affordable solutions to all these problems.

Dutch companies develop special solutions for the Indian agricultural sector

Indian agriculture therefore offers great opportunities for European companies. There is a demand for knowledge that is abundant in Europe. The global specialist in agricultural storage technology, the Dutch company Omnivent, has therefore been active in the country since 2007.. The company began by giving workshops to arable farmers and other key players in the supply chain. "We talked to farmers about ways we could get the agricultural product to the end of storage in a good way," says Errol van Groenewoud, Omnivent's managing director. 

"This was not only useful for them, but also for our company. We learned a lot about the resources they had at their disposal and the farming methods used in India at meetings like this," says van Groenewoud. "We came to the conclusion that our European ventilation and storage products did not match the farmers' needs and that, if you want to capitalise on the growing demand for smart solutions, you have to develop low-threshold and efficient technology at minimal extra cost. We have therefore taken the simple fans that we sold in the Netherlands in the 60s and 70s for drying flower bulbs and adapted them to provide a good and affordable solution for Indian farmers facing high temperatures."

Developing products for India

Also The innovative seed enhancer Incotec soon after entering the market in India, came to the conclusion that while their seed enhancement technologies offered a great solution to the problems of local farmers, their prices were far too high for India. "To optimize our products for Indian crops and cultivation techniques, and especially to keep the price accessible, we decided to develop a product that was cheap for us to produce and that Indian farmers could apply to their seeds themselves," explains Erik-Jan Bartels, managing director of Incotec.

Market leader in India

Incotec is now the market leader in India in seed enhancement and sees a growing need among farmers for new technologies that can make farming methods more robust against climate change. "At the same time, a large proportion of Indian farmers still do not have the means to invest in innovative solutions, no matter how simple and cheap," says Bartels. "As a Dutch company, this should not stop you from taking the step to India. Indian agriculture must adapt to the major weather changes taking place there and although it will take at least a few more years before there is a real change, now is the time for companies to become active in India. India is a country where you have to invest time and energy before you can reap the benefits."

Take your time, it is worth it

"Doing business in India requires building good relationships with your customers," adds van Groenewoude. "So you have to take the time and have a local presence to be able to make that connection. Building a dedicated team in India that can fully focus on this is essential. If you stay at a distance and thus maintain a cold, businesslike relationship with your customers, you will never be successful in business in this country." 

Are you curious about the opportunities the Indian agricultural sector offers for innovative, European companies? Our sector analysis provides a comprehensive overview of key market statistics and growth prospects.

Did you know that India is the fastest growing agricultural machinery market in the world? 

Indian agriculture is need of European knowledge and technology

India is the second largest food producer in the world, but roughly 35% of that production is lost due to a lack of knowledge and technology. In Europe, both are abundantly available, so what are we waiting for?

Huge mountain of food

While the Indian IT industry can compete with the rest of the world, Indian agriculture still lags miles behind modern production standards. Despite the lack of knowledge and technology, India produces a huge amount of food in the traditional way. Only China produces more. More than 50% of Indians, about 700 million people, work in agriculture. The majority are farmers with a small plot of land - there is hardly any large-scale agriculture. 

More than rice

The main agricultural products in India are rice, cotton, ginger, cardamom and wheat. Thanks to the enormous variety of climate zones - subtropical, tropical, temperate, dry - there are ample opportunities to grow all kinds of fruit and vegetables, both for the Indian market and for export. In western India, for example, grapes are grown on a large scale, which can be found in supermarkets in Europe. In the Himalayas many apples are grown, mainly for the internal market. India also offers cultivation areas with good soil quality. 

Temperate climate

The Deccan Plateau - the large region linking Pune, Nashik, Hyderabad, Bangalore, Coimbatore and Kholapur - offers a large agricultural area with a temperate climate. The Deccan Plateau has a fairly consistent climate with moderate temperatures. The minimum night temperature is 16°C in winter and the normal maximum temperature is 30°C, with the exception of April and May when night temperatures are a minimum of 22-23°C and a maximum of 35-38°C. The climate in the north of the country, in the foothills of the Himalayas, is somewhat seasonal. There are several microclimates here.

Potatoes

North Maharashtra, Gujarat, Madhya Pradesh, Upper Pradesh, Orissa and Bihar, all lowlands are very hot from March to September with monsoon from mid-June to late August. Rajasthan has mainly a desert climate with high temperatures from March to October; the north has relatively cold winters (above 0°C). Punjab has hot summers and cold winters. Potato cultivation (Indians are not only rice eaters but also very keen potato eaters) takes place here from November to May. Kodaikanal and Ooty (Tamil Nadu) offer a favourable climate for coffee, tea, vegetable and flower growers. Kerala in the east has the Western Ghats mountain range, which connects to the Kodaikanal mountain range, centred on Munnar. Here, tea is mainly grown.

"Western" vegetables

Himachal Pradesh in the north of the country offers a similar climate. Farmers in this region want to make the most of the climatic and soil conditions and grow all kinds of "Western" vegetables such as asparagus, broccoli, lettuce, coloured peppers, celery, Brussels sprouts, European carrot, parsley, leeks and snow peas. A considerable area in the state already grows vegetables of European origin. However, the northern states are located in hilly areas, which often makes logistics a challenge. Tamil Nadu and Andhra Pradesh consist mainly of tropical dry areas, at about 300 metres above sea level. There is plenty of cultivation here from June to September, after which the rainfall is often too erratic. The main production includes rice, bananas, coconut, ginger and cardamom. Kerala also has a large humid coastal area where sufficient water is available.

The chart below lists the different vegetables and where they are grown in India:

Product	Annual output ('000 metric tonnes)	Region	Advantages of the region
Tomatoes	21,200 (2020-2021)	Andhra Pradesh, Madhya Pradesh, Karnataka, Gujarat, Odisha, West Bengal, Chhattisgarh, Maharashtra, Bihar, Haryana, Uttar Pradesh, Telangana and Tamil Nadu.	Suitable (loam) soil, correct PH value, government support.
Cauliflower	9,174 (2018-2019)	Uttar Pradesh, Karnataka, West Bengal, Punjab, Bihar, the northern Himalayas and in the Nilgiri Hills in the south.	Cauliflower usually grows in the cold season (18 to 20°C). Good soil fertility.
Broccoli	8.6 (2017)	Maharashtra, Tapi district	Suitable loamy soils, correct PH values, temperatures between 18°C and 23°C.
Cucumber	1,100 (2019)	Haryana, Karnataka, Madhya Pradesh, Tamil Nadu, Andhra Pradesh, Telangana, Assam, Uttar Pradesh, Bihar, Jammu and Kashmir.	Good soil, suitable climate (moderate to warm).
Kool	9,207 (2019)	Uttar Pradesh, Orissa, Bihar, Assam, West Bengal, Maharashtra and Karnataka.	Suitable climate (cool and humid) In winter around Nashik (Maharashtra) and Ooty (Tamil Nadu) and Kerala.

Traditional cultivation

Cultivation in Inda is often still very traditional. There are hardly any glass greenhouses: generally, greenhouse foil is used to protect crops. Nevertheless, India has made progress with regard to cultivation aspects and the use of foil, shade and net greenhouses. The supply industry has also developed and equipment and facilities (greenhouses and other requirements for cultivation) are often manufactured in India itself. However, income from production is modest and growers do not make large investments in cultivation production. Nevertheless, there is a growing interest in technology, such as fertigation (fertilisation and irrigation), automation, substrate growth, semi-automatic climate control, modern cultivation techniques, data recording etc.

Agtech

According to researchers from the Tamil Nadu Agriculture University, India throws away billions of dollars worth of fresh fruit and vegetables every year - about 35 to 40 per cent of its total fruit and vegetable production. This is due to lack of proper harvesting methods, no or inadequate transport, poor or no cold storage facilities and/or refrigerated transport. Although India is one of the largest producers of fruits and vegetables, its export potential is not being realised. Agtech aimed at rationalising supply chains and improving agricultural efficiency in India has an estimated potential of US$ 170 billion.

Quality

Thanks to the growing focus on healthy lifestyles, the demand for high-quality products is increasing in India. According to a major market study, the Indian organic market will grow from USD 177 million in 2020 to a market worth USD 553 million in 2026. Officially, India has the largest number of farmers active in organic farming (835 thousand), but it accounts for less than 1 per cent of global organic production (worth around EUR 80 billion). In terms of total area under organic cultivation, India ranks 9th with 1.49 million hectares. However, the organic sector in India is unregulated and not transparent. 

Online food retail

The demand for high-quality and organic products is fuelled by the young population, their growing disposable income and the trend to eat out. The restaurant industry is booming and interest in foreign cuisines and products is huge. In addition, during the pandemic, online food retail has grown exponentially in India. Shopping or ordering food through online supermarkets or delivery services has become established in India at a rapid pace. As a result, the online grocery market grew by 80 per cent in 2020 alone and the Indian meal delivery market will continue to grow by around 30 per cent annually to a value of USD 8 billion by 2022, according to a study by the Boston Consultancy Group and Google.

Workshop: Market entry in India

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Indian R&D division worth gold to NXP Semiconductors

Chip producer from Brabant, NXP, has grown into one of the largest chip producers in the world with a turnover of 11.1 billion dollars. “NXP’s operation in India plays a big part in that”, says Vice President of NXP, Sanjay Gupta. “We have 650 patents to our name.” 

Sanjay Gupta (in blue) during the NXP India Mentorship Program

Largest R&D hub 

NXP has 4 R&D offices in India. More than 3000 people work there in total. The various locations focus on specific markets. In Noida, near capital Delhi, they design hardware and software used in the next generation of microcontrollers and microprocessors for the automotive and edge computing industries, in Bengaluru they focus on the IoT and security markets, in Pune on connectivity solutions and in Hyderabad on software solutions for the communications and infrastructure market. "India is NXP's largest R&D hub," Gupta says. "And is also considered one of the most innovative hubs. We have so far been able to add more than 650 patents from India to NXP's already impressive list of patent families." This, according to Gupta, once again underlines the quality of Indian engineers.

Business culture in India

Gupta himself was an engineer from a leading university in India. "Twenty-six years ago, as a recent graduate, I was offered a job with this great organisation. I was fortunate to have multiple opportunities to grow and excel within this global company and was guided and supported by the management of NXP every step of the way, from one challenging role to another. In 2016, I was given the most challenging opportunity to lead NXP India, while the company merged with US semiconductor maker Freescale. Examples like my career within NXP are a huge motivator for our people: they know that truly everyone has the opportunity to develop within the company." 

NXP's Senior Leadership Team is actively working to create a family culture across all sites. "This is also good for the business," says Gupta. "Despite the fact that our teams in India are literally miles apart and focus on different products and markets, we encourage collaboration between departments as much as possible. We find that when we bring different disciplines together, they learn incredibly well from each other and often come up with new ideas or solutions for their own segment."

Ease of doing business

According to the India vice-president, companies who are still unsure whether India is the right location for their R&D department should make a move now. "There is a lot of talent in India and you don't have to worry as a company about the quality they can deliver. Moreover, doing business in India is becoming easier; just look at the enormous leap India has made in the past five years on the World Bank's Ease of Doing Business list. In addition, the government is investing heavily in the development of industries such as manufacturing and the chip industry. No wonder India is becoming increasingly popular with foreign investors."

Read more about the benefits of outsourcing your R&D to India and why now is the right time:

Tax benefits

The Indian government has announced in the 2022 budget to extend the tax benefits applicable to international companies setting up a manufacturing plant in India. In addition, major investments will be made in the chip industry, the automotive industry and infrastructure. According to Gupta, this offers interesting opportunities for European companies. "If you want to successfully enter the market in India, you need a long-term vision. Therefore, you should not only consider setting up your R&D here, but also explore the production possibilities. That way you can take advantage of the current incentives and be agile and prepared to respond to the rapid developments in Indian society."

Competition increases

Gupta is not worried about the potential competition for NXP now coming to India due to the favourable business environment. "First of all, I think competition is healthy for any company because it makes you more focused and efficient. In addition, we at NXP are so versatile, we work with talented people and the markets in which we operate are developing so rapidly that I expect us to increase our sales significantly in the next five years. Take for example the automotive industry, one of our key markets. We are currently working on exciting innovations and solutions for electric vehicles, infotainment & connected cars and autonomous vehicles, with a focus on improving the customer experience. This sector will continue to evolve in the coming years."

India is at a turning point

The MD admits that these advanced technologies may not yet be 100 per cent suited to the current needs of the Indian consumer. "But make no mistake, India has a population of over 1.4 billion, half of whom are under 35 years of age. This rapidly developing country has a growing middle class and rising income levels, creating huge business opportunities for international companies if they dare to seize the chance to invest in India and be part of this journey. India is known for embracing new technologies and solutions at an exponential rate, once they are at an affordable level. For instance, India is the largest two-wheeler country in the world. Every year, more than 20 million motorbikes and scooters are produced for the Indian market. The number of Internet users is also a good example. It has increased by 800 per cent in 10 years. Paying or shopping online was very unusual just a few years ago and now it has become commonplace. India is at an interesting turning point that companies should take advantage of." 

Market entry workshop

To become truly successful in India and take advantage of the opportunities described by Sanjay Gupta, a solid market entry strategy is required. India is a market that requires a long view and a good understanding of local needs and preferences. To make sure you start with the right strategy, IndiaConnected has set up a special Market Entry Workshop.

In 2 hours you will discuss your strategy with our experts and the following topics will be covered:

• Get a better understanding of what is involved in your market entry in India.

• Receive valuable feedback on your current India strategy from independent experts.

• Expertise in every field: sales, manufacturing, legal, tax, finance, supply chain, recruitment, etc.

Request a quote from us now.