Dubai Investment Fund bets on India’s agricultural technology sector

*Dubai Investment Fund (DIF) has a 20-year plan to invest in India, focusing on new technologies

*Private investors are interested in India’s agricultural technology

The fertility of India’s land and the country’s water supply is under significant strain, which necessitates the development of novel solutions and advanced technologies. Statistics from India’s Ministry of Agriculture show that fewer than half of the country’s farms provide positive economic returns. As a result, the Indian government has made it a priority to work toward increasing farm production and the income of farmers. In addition, crop yields in India are much lower than the norm for the region. For example, the average rice yield in China is twice as high as in India, indicating that India has a significant growth opportunity if new agricultural techniques are implemented.

As a direct consequence of this, private equity entered the picture. In recognition of the challenges that investors face when attempting to diversify their portfolios across emerging markets, the Dubai Investment Fund (DIF), which is one of the largest independent funds in the world, has developed a phased strategic plan for investing in India’s agricultural sector that spans the next 20 years. The DIF’s management and business improvement department conceived the strategy, which was then presented on May 25, 2022, and implementation of the strategy began on July 1, 2022. According to the plan, India’s food basket should increase by 12% in production, productivity, and exports.

Emerging markets will provide some stability from inflationary pressures due to the role of food in the consumer price index and the continued improvement in global supply chains, and DIF’s long-term strategy is based on the multiple studies and subsequent assumption by many corporate investors that this will be the case. This is the assumption that underpins DIF’s long-term strategy. Despite this, the fund emphasizes the significance of selectivity for investors in order to avoid experiencing extreme volatility. The rigorous sector valuation enables investors to achieve higher returns while minimizing portfolio volatility by capitalizing on growth opportunities. As a result, it is safe to predict that the DIF will prioritize investments in agricultural businesses that have been meticulously chosen and use cutting-edge methods and technologies in Indian agriculture and food production. Although e-commerce in agriculture, integrated supply chain management, and agricultural technology are the trending areas for investment in the Indian agriculture sector, all primary production stages are being explored. Based on DIF’s social media tweet, it may be seen that their expansion into the Indian agricultural market is also a part of the company’s humanitarian projects aiming to combat the food crisis.

Most Indian farmers are still involved in small-scale businesses with low potential returns, which is the primary source of the country’s agricultural crisis. These companies eliminate intermediaries by promoting direct purchases from customers, saving waste, and retaining earnings at the farm gate thanks to investments in agricultural e-commerce, which also expands purchasing alternatives while cutting prices. The enhancement of food handling and storage procedures, as well as interactions with consumers outside of the farm, is another way that innovations in supply chain management can boost farm profitability.

It is essential to offer farmers access to agricultural technology since doing so will improve harvesting procedures, provide reliable water and electricity supplies, provide state-of-the-art equipment, and open up access to the newest seed and fertilizer technology innovations. These enhancements help farmers improve their standard of living by halting the migration of skilled labor to other industries, but they also make it possible for farmers to invest in methods that will lead to an even higher production level. It is, therefore, impossible to place an adequate amount of emphasis on the part that DIF and other investment funds have played in the expansion of the agricultural sector in India.

Nevertheless, as with the other DIF investments, this does not mean targeting any particular nation, asset class, industry, or grouping of countries as an investment theme. Instead, it means investing in markets with the highest upside potential, less volatility, and are anticipated to be the largest contributors to aggregate returns over the next five to ten years.

We can also assume that as a rational economic player, DIF acts on the assumption that emerging market equities offer a compelling risk-return scenario as the development of these markets continues to meet widespread global investor demand. Over the past few years, one of the primary drivers of the entire emerging market asset class has been sustained global growth, accompanied by an expansion in the size of the global middle class and a growing number of consumers. Because of this growth, the economies of these regions now have access to a big addressable market. Improving people’s living conditions is another crucial aspect that has worked to the advantage of emerging market equities.

One of the largest pension funds in Canada intends to spend one-third of its money in emerging economies, and it cites India as an important investment destination in its justification for doing so. The Dubai Investment Fund is not the only fund with a positive outlook for India. In a similar vein, venture capital firms in India are investing a significant amount of capital in the digitization of the purchasing habits of Indian farmers. After the economic collapse that hit major nations, substantial investment opportunities have shown themselves in emerging markets, particularly India.