IFAD to Invest in Indian Agri-Startups

New Delhi, May 14 (PTI) The International Fund for Agricultural Development (IFAD) is looking to make its first direct investment in Indian agricultural startups, targeting three to four deals over the next year, as the UN agency shifts its financing model away from donor grants to private capital, a senior official has said.

IFAD, which amended its founding articles roughly seven years ago to allow direct private sector investments after previously being restricted to government financing, is now actively seeking opportunities in India's agri-entrepreneurial ecosystem.

"We're trying to take it to a whole new scale," Donal Brown, IFAD's Associate Vice-President for Country Operations, told PTI in an interview.

"We now have a big private sector division, and they were in India recently -- about three or four weeks ago -- looking at a number of opportunities," Brown said, adding that IFAD has received four to five proposals from Indian agri-businesses. The proposals span agricultural startups, rural finance and digital platforms.

On May 12, IFAD and the Indian government launched a new eight-year country strategy here in the national capital, setting goals around climate and economic resilience for rural communities.

The strategy -- jointly developed with the Union finance and agriculture ministries -- targets the country's 110 aspirational districts and poorest states, aligned with Prime Minister Narendra Modi's Viksit Bharat@2047 development vision.

IFAD's current India portfolio stands at approximately USD 1.2 billion across five projects, with direct financing of about USD 350 million. Funding for new projects in the current three-year pipeline is around USD 160 million.

But the agency is moving away from grant dependence. Brown described IFAD as an "assembler of finance", using its own balance sheet to draw in private capital.

Globally, it has leveraged around USD 1.5 billion in private sector investment across more than 1 lakh companies.

"You can't rely on the old system of donor grant funding," Brown said. "The future must be around private sector investment catalysed by public sector investment."


IFAD has signed a letter of intent with NABARD to explore co-investments, which Brown described as among the most promising elements of its India push. "Bringing their experience and our experience -- not only in India but globally -- together will be very powerful," he said.

Brown said a central plank of IFAD's work would remain connecting small farmers to markets across the full value chain -- from productivity improvements through storage, processing and marketing.

"If you're a small farmer and you produce 10 kilos of rice to sell, you're going to get a low price for it," he said. "But if you're part of a farmer cooperative selling 2,000 kilos of rice, you can bargain for a much better price."

The agency also plans to expand 'South-South cooperation' -- exporting successful Indian models such as women's self-help groups, village savings schemes and farmer cooperatives to other developing countries facing similar challenges.

Brown identified climate change as the defining long-term challenge for the communities IFAD serves, warning that small rain-fed farmers faced the steepest risks with the fewest resources to adapt.

He called for a shift towards agro-ecological practices, improved soil health and traditional crops better suited to India's changing climate -- including millets and sorghum -- over water-intensive staples such as wheat and rice grown in marginal conditions with heavy irrigation.

"There are very, very good crops suited to the climate, like millet and sorghum," Brown said and highlighted that 2024 was the International Year of the Millet.

On implementation hurdles, Brown acknowledged significant execution risks, citing frequent turnover of state-level project directors as one of the most damaging factors in project performance.

"It's like a football team -- If you have five managers in a season, you guarantee bad results," he said. "You need continuity of leadership."

IFAD currently runs projects in Maharashtra, Meghalaya, Mizoram, Jammu and Kashmir and Uttarakhand, among others, building on a long track record in Odisha and Tamil Nadu. Brown said he would travel to Assam and Meghalaya to explore new investments under the incoming pipeline.

The agency's first investment in India dates to 1978. Brown said he expected IFAD to mark its 50th year of India partnership in 2028 -- and anticipated the relationship would continue for decades beyond that, even as its nature evolved toward private sector engagement and knowledge-sharing.