By Sarah Watson —

Agriculture’s importance in India’s economic landscape is declining, but it still employs nearly 50 percent of workers. While most observers agree that India’s future growth path lies in moving workers out of agriculture to more productive fields like manufacturing or services, agriculture will continue to be a crucial source of jobs for many years to come. Given this reality, bringing growth to rural areas means increasing the productivity of India’s agriculture sector. India is already positioning itself to become a global player in a sector that has enormous potential for transforming agriculture: the Internet of Things (IoT). The IoT/agriculture nexus provides a natural focus for India’s efforts in the IoT sector and holds out the possibility that India could increase agricultural yields while also improving the lives of its least-connected citizens.

More than 45 percent of Indian workers are employed in agriculture, the country’s least productive sector. Indian agriculture is not just unproductive when compared to other sectors of the economy; it is extremely low compared to other developing countries. In 2013 India’s value-added per worker of $1,116 won it only a 134^th-place ranking out of 170 countries. Productivity is improving, but slowly — between 2003 and 2012 India’s Total Factor Productivity (TFP) increased on average 2.6 percent per year.

An increase in cultivation of high-value crops, such as horticultural products, might offer a partial solution to the problem of rural livelihoods. Horticulture has already made an important contribution to the overall rise in India’s TFP since 1980. Indian exports of fruits and vegetables have exhibited double-digit growth over the past three years even as exports of cereal crops have fallen dramatically. But Indian horticultural productivity is also relatively low. Productivity per acre of fruits and vegetables, the two most important horticultural products, barely increased in the first decade of the 21^st century.

IoT technology holds enormous potential for increasing agricultural productivity, particularly in resource-scarce environments. IoT technology works particularly well in controlled settings such as greenhouses, because a fully functional system will be able to automatically make adjustments to the environment in response to sensor data. IoT sensors can monitor, and respond to, temperature, humidity, pests, soil pH, and light intensity and instruct networked systems to administer water and fertilizer as necessary. The high cost of such systems, and their need for controlled environments, makes high-value horticulture the obvious place to start.

IoT technology is new enough that little data exists as its effect on crop yields. But Indian organizations are already experimenting with its potential. The Indian government’s Centre for Development of Advanced Computing has developed a ‘Smart Farm System’ that allows farmers to monitor the status of their crops via smartphone. Despite spectacular success in at least one location, the Smart Farm has not been widely adopted. As of 2014, 20,000 Indian farmers were using a simple cell-phone based system called Nano Ganesh to turn irrigation pumps on and off remotely — especially useful when power to the pump comes on in the middle of the night. Since 2005, a group of Indian and French researchers has been testing a network of underground sensors that tells farmers in a water-scarce area the optimal moment to water their crops. With no cell service in much of the district, the sensors were designed to operate on their own independent network. More complex applications include customizable greenhouse lighting systems that can reduce power costs by 70 percent.

Prime Minister Narendra Modi’s government has seized on the possibilities the burgeoning IoT market presents for Indian high-tech exports. A draft national IoT policy (first released in 2014) lists agriculture as a priority area for IoT development in India, but adoption of this approach is still in its nascent stages. The Ministry of Agriculture’s current IT-related efforts are focused on creating unidirectional information portals to provide farmers with information about national seed prices, weather trends, etc. Andhra Pradesh was the first state to adopt an IoT policy, but the document makes no mention of agriculture, despite the fact that the state is one of India’s top four producers of both fruits and vegetables.

India has a long way to go before it can boast a truly networked agricultural sector. The first, and most obvious, hurdle is access to wireless data services. India has at least 430 million rural cell-phone subscribers, but they do not necessarily have access to data on their phones: only 120 million Indians have mobile broadband, making India 155^th in the world in mobile broadband connectivity. Less than 13 out of every 100 rural residents have an internet connection.

Building a more high-tech (and thus capital-intensive) agricultural sector will also require significant investment, both domestic and foreign. India has allowed up to 100 percent Foreign Direct Investment in greenhouse horticulture since 2013, but the sector as a whole has attracted only $2.2 billion in foreign direct investment (FDI) since 2000 — far less than services ($50 billion) or construction ($25 billion). The steady liberalization of this sector (food marketing was opened to 100 percent FDI in June 2016) could attract more investment.

Finally, education must undergird any agri-tech strategy. The world’s best sensors will only help farmers make good decisions — not make the decisions for them. One study by the U.S. Department of Agriculture found that efforts to educate Indian farmers to use more productive techniques had no effect unless the farmers had at least four years of education. Previous unsuccessful experiments with sophisticated farming methods, like polyhouses, make clear that proper training and support are crucial to widespread successful adoption of any innovation.

India has a vast potential market for technology that makes farming easier, more predictable, and more productive, but it will take time and effort to nurture that market. The government’s final IoT policy should offer specific incentives to states to integrate agriculture into future IoT policies, to Indian farmers to integrate technology into their farming practices, and to foreign and domestic manufacturers to manufacture for the Indian market.

Ms. Sarah Watson is an associate fellow with the Wadhwani Chair in U.S.-India Policy Studies at CSIS. Follow her on twitter @SWatson_CSIS.