Consumer internet and digital media monthly insight: From funding boom to sustainable growth – what comes next for India’s agritech sector

In this edition of our monthly insight, we turn our attention to India's agritech sector, a market that has undergone a significant transformation over the past few years. Following a period of rapid funding and expansion, the sector has experienced a correction and now places greater emphasis on sustainable growth, sound unit economics and the path to profitability. Two questions follow: what distinguishes the businesses that have emerged stronger, and what will drive sustainable growth and profitability as the sector enters its next phase? 

In our insight, we look at the three changes in market structure opening new sources of demand; cross-border trade in fresh produce, the growing footprint of organised and quick-commerce buyers, and the development of private labels. We then examine the two operating shifts that separate the businesses converting that growth into margin: a move from basket breadth to category depth, and a move from displacing traders to underwriting them. The result is a more mature sector, where growth depends less on capital availability and more on structural demand, sourcing advantage and operating discipline. 

This edition is written for the private equity, venture capital and institutional investors following India's consumer internet and digital media markets. At Analysys Mason, we have supported a number of the recent marquee mandates in this sector, and here we share some of the non-confidential insights from that work with this broader group. 

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