Vision 2025 for Indian bioagri sector

India is currently facing one of its most formidable economic challenges— addressing the widening demand-supply gap in food grain production. With a growing population and scarcer resources, India needs to produce more with less.

Biotechnology agriculture (bio agriculture) through its wide offering landscape can provide the answers—helping improve the effectiveness of agriculture inputs, bring down input costs and increase output. But there are many challenges before the bio agriculture industry. What is the overall potential of the industry? How can various stakeholders address the challenges of expanding the market? What kind of growth enablers are needed to realise the sector’s potential? To answer these questions, the Confederation of Indian Industry (CII) and Accenture put together the report, Indian Biotech Agriculture Industry: Vision 2025, to define the industry’s vision for 2025 and recommend the measures various stakeholders must take to realise this vision.

India’s bio agriculture sector is currently estimated at $7.8 billion (including crops produced through the genetically modified (GM) technology). Biotechnology offers multiple innovative techniques to develop high-yielding crops that can counter the biotic and abiotic stress associated with Indian agriculture.

High-yielding seeds

Bio agriculture yields better results than traditional techniques while maintaining the stability and fertility of soil. High yielding seeds significantly enhance the productivity potential and provide resistance from adverse environmental stress such as drought and salinity. They are particularly effective and relevant for a country like India that suffers from water scarcity and drought every year. High-yielding seeds also protect crops from diseases and insects. (see Figure 1): It shows key bio agriculture technologies and their applications.

Figure 1: Key Bio Agriculture Technologies

Bio fortification

Bio fortification is the development of micronutrient-rich staple crops using traditional breeding methods and modern biotechnology. Using this technique, plant breeders focus on crops, such as soybean, that have high nutritional content. This technique is advantageous for developing countries in providing necessary nutrients especially to the rural population who rarely have access to commercially fortified foods.

Nutrition

Biotechnology techniques fulfill plant micronutrient requirements by supplying organic nutrients through microorganisms and their by-products. These microorganisms doctor the natural nutrient cycle of the soil and build soil organic matter.

Pest management

Agricultural crops face a significant threat from a variety of natural enemies such as predators, parasites and pathogens. These pests can damage crops and impact the nutritional value of the produce. Biotechnology offers a solution to this problem, with minimal harm to the environment.

Wastewater utilisation

Population growth, climate change, urbanisation and limited freshwater resources have made waste water a vital source of irrigation water for farmers. It is particularly important to utilise wastewater from domestic use, institutions and industries. Grey water generated from washbasins, showers and baths—is suitable for reuse and contains nutrients important for agricultural production. Despite the wide range of bio agriculture offerings, the Government of India has approved only GM Bt cotton seeds for commercialisation since 2002. These seeds were quickly adopted by farmers, and this paved the way for the growth of bio agriculture. After the introduction of GM Bt cotton seeds, the bio agriculture sector registered a compound annual growth rate (CAGR) of 49 per cent from 2003 to 2010 (see case study) and then slowed to 18 per cent during 2009–12. Several factors have contributed to this sector losing steam. 90 per cent of the cotton area is already under Bt cotton cultivation leaving little room for growth. Lack of new hybrids, a passive regulatory system and limited investment in R&D too have hurt growth and innovation. The next section discusses in detail the challenges before this sector.

Case study

Seeds of hope—Recollecting the success of Bt cotton in India

Bt cotton seeds are genetically modified to produce an insecticide that kills bollworm, a common cotton pest in India. The Government of India allowed Monsanto Company, an American firm, to start selling Bt cotton to local farmers in 2002. Since then, Bt cotton has pervaded cotton farming in India. Today, the Bt cotton acreage accounts for more than 90 per cent of the total area under cotton cultivation. This has helped India become a net exporter of cotton. Bt cotton has succeeded in transforming cotton into one the most productive and profitable crops in the country.

However, it still requires further research because of the development of Bt cotton-resistant pests.

Key outcomes

• Cotton output increased to 35.2 million bales in 2011 from 13.7 million bales in 2002
• A 68 per cent rise in per hectare yield
• A 25 point reduction in the use of pesticides, from 46 per cent to 21 per cent
• A 129 per cent increase in farmers’ income per hectare, to Rs 16,000 from Rs 7,000 in rain-fed areas and higher in irrigated areas—by reducing costs of inputs such as pesticides
• 7 million farmers who were living below the poverty line in 2011 have benefited from cultivating Bt cotton

(see Figure 2): Cotton Production in India (Annual Yield)

Figure 2: Cotton Production in India (Annual Yield)

Sources: Agriculture statistics 2012, Ministry of Agriculture; news articles; Accenture analysis

Challenges

Government agencies do not have a single view on the application of GM technology in agriculture. The country also lacks a road map to leverage biotechn. Regulatory approvals are not given on time, and multiple regulatory bodies cause inordinate delays. Currently, 91 applications for field trials are pending for approval, 44 of which are for GM food crops. To overcome such delays, the government proposed to set up Biotechnology Regulatory Authority of India (BRAI), an independent regulator under the Ministry of Science & Technology, but the proposal is still waiting for Cabinet approval. Going ahead, the challenge for the government will be to establish an effective regulatory system and a communication mechanism on GM foods, which can help allay fears about the safety of such crops, while ensuring higher productivity and remuneration to farmers.

India’s current R&D spend on agriculture is only 0.6 per cent of the total agriculture gross domestic product (GDP), which is less than the average of 1 per cent spent by other developing countries.

This problem of inadequate R&D spend is compounded by the need to apportion the budget between numerous public institutions. To improve the chance of converting these investments into commercially viable products, meaningful collaborations between public and private institutions are required at an early stage of development. However, public-private partnerships are “infested” with glitches such as lack of harmony between the individual objectives of public research centres and their alignment with agricultural challenges, long recovery period of approximately 8–10 years to commercialisation and ambiguity on intellectual property (IP) ownership. Going ahead, the challenge for the government will lie in forming mutually beneficial public-private partnerships.

The real value of this can be realised only when there is a clear, identified path to market. Further, involvement of private sector scientists and industry captains in various decision-making bodies of the government will be a step in the right direction.

India clearly lacks an informed debate on the benefits of biotechnology techniques in agriculture. The current opposition to GM is largely due to the lack of understanding of the technology by a certain group of people. A comprehensive evaluation of GM technology needs to be undertaken, looking at all aspects including social, environmental and economic. Seed pricing in India is largely determined by the government and often remains unchanged for years despite the rise in input costs. The country needs a government-approved framework to enable calculation of licensing fee or trait fee in a transparent manner. Going ahead, the challenge for the government will be to increase awareness of bio agriculture and formulate a transparent framework to encourage farmers to embrace biotechnology.

Figure 3: Current and Projected Market Size of the Indian Bio Agriculture Industry

The bio agriculture sector has the potential to expand manifold, from US$7.8 billion today to US$34–37 billion by 2025 (see figure 4). However, to realize this market opportunity, the industry needs to implement the following growth enablers:

Note: Current market data based on Association of Biotechnology Led Enterprises (ABLE) biospectrum survey, June 2013; current bio agriculture market adjusted to include output due to existing bio agricultural products; dollar-rupee conversion rate kept constant for the projection period based on FY13 rate Sources: Accenture Market Size Model, primary interviews

Recommendations

The bio agriculture sector has the potential to expand manifold, from $7.8 billion today to $34–37 billion by 2025 (see Figure 3). However, to realise this market opportunity, the industry needs to implement the following growth enablers:

Policy framework and regulatory system

The policy hiatus and regulatory uncertainties in the country have impeded the growth of Indian agriculture. The government needs to streamline the regulatory system in the following ways:

• Lay out the role of various biotechnologies in solving the agricultural challenges faced by the country and identify the technologies relevant to the Indian context
• Identify priority crops where biotechnology intervention is required; identify crops for self sufficiency and those for exports
• Form a single regulatory authority to govern all bio agriculture domains falling under various ministries and coordinate between the relevant central and state ministries for any approvals
• Reinforce the capabilities of existing supervisory committees to effectively deal with complexities associated with the evaluation of bio safety trials; ensure evaluation is based on scientific facts
• Set up procedures and targets with clearly defined timelines; check implementation and adherence to timelines

Innovation

Innovation can play a key role in the success of the bio agriculture sector by enhancing productivity, ensuring self sufficiency of key crops and increasing farmer income. But successful innovation needs the right policies, infrastructure and market structure. Additionally, promoting cross-fertilisation of knowledge and capabilities can drive new, innovative business models and attract investment. The challenges are enormous, but the opportunity the sector presents is both substantial and achievable. The following steps can be initiated for successful innovation:

• Establish a framework to take to market successful research projects developed at public institutes; ensure concerned scientists get commensurate benefits
• Increase R&D spend for public institutes; revisit existing R&D allotment methodology to ensure a critical mass for effective research
• Develop models to encourage public-private partnerships; transfer any IP generated from such partnerships to the concerned private player
• Allow private players to use underutilised public laboratories by paying a rent or service fee
• Facilitate pooling of private investments for effective R&D utilisation; create a mechanism to enable private players to jointly share investments, risks and benefits
• Develop a framework for sharing licensing fee/ trait fee in a transparent manner

Targeted initiatives

Of late, the bio agriculture sector has been in the news for all the wrong reasons controversies and growing opposition to GM seeds. In India’s case, this has been exacerbated by the lack of dissemination of science-based information to all stakeholders to enable them to engage in an objective and transparent debate. The following steps can be initiated:

• Develop a strategic plan for public communication to improve understanding of biotech and its products
• Work toward achieving public support and consumer acceptance for biotech enabled agriculture products
• Spread awareness of the use and benefits of biotech among farmers, form official groups for farmers to ensure their views and concerns are adequately epresented, take initiatives to cater to farmers’ need for funding such as providing low-interest loans for purchase of equipment