India Market Watch: Investors Eye India’s Agri-tech Startups and Indian IT firms Brace for New US H-1B Norms

January 23, 2017 Posted by India Briefing Reading Time: 5 minutes

Investors Eye India’s Agri-tech Startups

India’s startup landscape is fast becoming highly diversified as specialized technology verticals emerge in respective areas of economic activity. This trend is visible in the country’s farming sector as well, where an increasing pool of agricultural technology (agri-tech) startups have emerged, focused on developing new data solutions to mitigate various risks. Some of these startups are innovating the use of available technology like drones and tractors to get data on field, weather, and specific agricultural datasets.

Testament to the burgeoning value of agri-tech in India is the huge interest expressed by venture capital (VC) firms in investing in startups in this sector. Leading VC firms such as Accel India, SAIF Partners, and IDG Ventures and others have so far mobilized funding for various startups like farm equipment aggregator – Goldfarm, raw material procurement platform for farmers – Agrostar, or offer agricultural supply chain technology – Crofarm. Omnivore Capital is currently backing three portfolio companies – Stellapps Technologies (an Internet-of-Things platform in the dairy sector), Ecozen (solar solutions startup), and YCook (an organic, ready-to-cook processed foods startup) – all of whom are in the market to raise funds.

The agri-tech sector in India includes all the technology, modern products, and services used in agriculture to increase yield, efficiency, and profitability. This concentrated focus, scientific research, and industrial application collectively provide fertile ground to entrepreneurial ventures. The growth prospects are further boosted by the increase in smartphone penetration and internet connectivity as well as the government’s Digital India push.

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India 10th Largest Business Travel Market

As per the Global Business Travel Association, India is the 10^th largest business travel market in the world, having spent US$29.6 billion in 2015. In a report released by consultancy firm KPMG and FCM Travel Solutions, business travel spending in India registered an increase of 15 percent in 2015. This is set to grow by a compound annual growth rate (CAGR) of 12 percent through 2020 to 6 percent by 2030. The report observes that about 80 percent of the business travel transactions were domestic, the rest being international, while the revenue was evenly split; 77 percent of the total travel spend was on air travel. Finally, IT and pharmaceutical companies dominated spending at US$2.93 billion (Rs 20,000 crore) in 2015, up from US$2.13 billion (Rs 14,500 crore) in 2013.

The KPMG and FCM report assesses that this growth in India’s business travel segment will be greater than that projected for South Korea, Italy, and Brazil. In fact, by 2030, India could be among the top five countries in business travel spending.

Ultimately, the report concludes that growth in the Indian business travel market will depend on political, economic, and demographic factors. Future growth will also be shaped by India’s macroeconomic status, regulatory policies, the national pace of industrial activity, and the continued digitization of travel booking tools.

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Indian IT firms Brace for New H-1B Norms

Indian IT firms anticipate major changes in the American outsourcing policy as the new government takes charge in the US. Further, the US Congress introduced a new bill to tighten H-1B visa rules, earlier this month. The bill proposes an increase in the minimum salary requirement from US$60,000 to US$100,000 to target the misuse of visa issuance and eliminate the profit margins of outsourcing firms. The bill also aims to do away with the exemption on students holding a Master’s degree.

The implications of such a policy turnaround will be serious. To put the situation in context, in April 2016, the number of H-1B visa applications surpassed the year’s total cap of 85,000 in five days with almost two-thirds issued to the technology sector. Moreover, the US accounts for 60 percent of India’s IT exports. Keeping this in mind, the National Association of Software and Services Companies (NASSCOM) – the trade association of the Indian Information Technology and Business Process Outsourcing industry – is planning to reach out to the new administration to highlight India’s IT contribution to the US economy. Indian Outsourcing firms have previously highlighted the lack of enough IT professionals in the US, which compels them to outsource work. Expecting the tightening of visa regulations, Indian IT firms have already started recruiting locally from US colleges, acquiring US based IT firms, and increasing offshore capabilities.

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