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Factors Behind Indian Startups To Venture Into Botanicals And Ayurveda Industry

Indian startups are realizing the value of Ayurveda and Botanicals and are marketing non-conventionally produced herbs and spices that are not tainted with pesticides and synthetic chemical fertilizers

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Ayurveda and botanicals are an ancient therapy based in India, and most people often know India as the land of Ayurveda since it originated from there a long time ago. Botanicals, however, are much more than Ayurveda, where its presence in most of the common medicinal, cosmetic products is neglected or unknown. India is incredibly rich in botanicals due to its access to the Himalayan region, thus a majority of our products are grown and processed in India.

A botanical is a substance obtained from a plant and used typically in medicinal or cosmetic products. However, botanical ingredients are present in almost every ingredient we use in our daily lives; spices, herbs, medicinal herbs, dietary supplements, food, sauces, spa, and more. 

People who are interested in choosing a healthy, nutritious lifestyle should use organic botanicals because not only do they add flavour to your food, but they also boast of tremendous medicinal properties, which prevent and treat innumerable diseases.

Business trends show that Ayurveda generates about $20 billion in the global market and it is growing. At this rapid rate, it is expected to cross the $5 trillion mark globally by 2050. The total amount of revenue generated from the Indian Ayurveda mart size is about Rs. 50 billion. It is growing strong at a rate of 10-15 per cent.

Indian startups are realizing the value of Ayurveda and Botanicals and are marketing non-conventionally produced herbs and spices that are not tainted with pesticides and synthetic chemical fertilizers.  

Factors responsible for Startups to invest in the organic food business are as follows:

Increase in demand for organic products

In many ways, organic food is still a niche concept in India. The current Indian domestic market is estimated at Rs. 40,000 million which is likely to increase by Rs. 100,000 million to Rs. 120,000 million by 2020 with a similar increase in exports. (Source: EY Report on Indian Organic Market March 2018). The predicted rapid growth rate of this industry along with other key factors makes it lucrative for investors.

The growth of e-commerce in India

With the ease of accessing the Internet, e-commerce has changed the way India shops. Be it groceries or personal care items, the ease of its availability on a click saves a lot of time for buyers. There is a growth in e-commerce platforms that deal in only organic products that helps the seller choose the best product available out there.

Export of Organic Products

India is ranked second largest in terms of the export of organic products in Asia after China. The increasing export market coupled with the Government’s support is making organic cultivation in India highly successful. Indian organic food exports were estimated at US$299 million during 2015-16 with total volume of 263,688 MT. The major export destinations were the US, European Union, Canada and New Zealand.

Introduction of the new variety of foods

Just a decade ago, superfoods were unheard of and not a part of the Indian diet. However, due to the increase in awareness, new organic products have come into being. Brands are now introducing the organic version of the usual products like tea, spices, juices, and herbs for health-conscious consumers.

Increasing support from Government of India

The Government of India is promoting organic farming and the consumption of organic food in the country. Financial assistance is provided to farmers who are adopting organic farming under various central sector schemes such as National Mission for Sustainable Agriculture (NMSA), Mission for Integrated Development of Horticulture (MIDH), National Food Security Mission (NFSM) and Rashtriya Krishi Vikas Yojana (RKVY). In the Union Budget of 2016, the Central Government proposed to allocate 500,000 in the country under organic farming and develop value chains in the Northeastern Region (NER).

One must also keep in mind that the cost of operating and producing organic products is higher than the conventional foods, which adds to high price markups. Secondly, these prices are also subject to high tax rates in India. The higher price acts as a barrier and refrains many consumers from choosing organic products; therefore, the bulk of sale is restricted to metro cities and supermarkets. As an industry, any government reform that helps in bringing down the price of these products will be pleasantly welcomed.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Tags assigned to this article:
botanicals organic food startups ayurveda

Rishabh Chokhani

The author is CEO and Founder, Naturevibe Botanicals, is a management graduate, visionary and a health enthusiast

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