Breaking News: Assam Government and Caspian Equity Unveil Rs 250 Crore Fund for Investment in Agriculture SMEs
Breaking News: Assam Government and Caspian Equity Unveil Rs 250 Crore Fund for Investment in Agriculture SMEs
Credit & Finance for MSMEs: According to the agreement, ARIAS would “establish and implement a contributory and determinate investment trust Assam Agribusiness Investment Fund (AAIF)”. Caspian Equity will administer the fund with a capital of Rs 250 crores.
The fund will make investments in convertible equity, stock, and debt. While equity holdings in portfolio firms will be for seven to eight years, loans will be for the short to medium term.
In a significant move to boost the agricultural sector and promote small and medium enterprises (SMEs) in the state, the Assam government has joined hands with Caspian Equity to launch a dedicated fund worth Rs 250 crore. This collaboration aims to provide financial support and facilitate the growth of SMEs operating in the agriculture industry of Assam.
To launch an investment fund that will target SMEs in the state of Assam’s agribusiness and related sectors, the impact investment company Caspian Impact Investment Adviser (Caspian Equity) has signed an agreement (MoU) with the Assam Rural Infrastructure and Agricultural Society (ARIAS), an autonomous body under the Assam government.
Assam Agribusiness Investment Fund (AAIF) would be established and implemented by ARIAS as per the terms of the MoU, according to a statement released by Caspian Equity on Tuesday. The proportion of beneficiaries is selected during the period of a determinate trust. The fund will be managed by Caspian Equity, with a corpus of Rs 250 crores.
The Assam Agribusiness and Rural Transformation Project (APART) has received anchor finance from the World Bank. The AAIF has become a Category II Alternative Investment Fund now registered with the Securities and Exchange Board of India (SEBI). The fund will strive to increase Assam’s agricultural output and job creation.
“Caspian intends to collaborate with neighbourhood incubators and accelerators to find and grow SME locals. With recommendations from regional financial institutions and agricultural businesses, we will identify prospective SMEs. We’ll also collaborate with agricultural organizations planning to establish offices in Assam, Caspian Equity told FE Aspire.
The firm will choose potential investors by “considering professional promoters and teams with strong credentials along with growth prospects with demonstrated capabilities of sales revenue, focus on unit economics, and most importantly openness towards strong governance and independent board.”
The fund will make investments in convertible equity, stock, and debt. While equity holdings in portfolio firms will be for seven to eight years, loans will be for the short to medium term.
“The World Bank is committed to supporting food value chain development in Assam in response to the growing demand for high-value food products,” said Toshiaki Ono, Finance Sector Specialist at World Bank Group. Agribusiness SMEs are essential to this change but need more access to outside funding, particularly long-term and patient capital, for expansion.
The initiative will enable farmers and rural entrepreneurs in Assam to adopt sustainable agricultural practices and cutting-edge technologies to enhance efficiency and lessen environmental impact, according to State Project Director for ARIAS Akash Deep. By leveraging collective strengths and through targeted investments, he added.
The Importance of SMEs in Assam’s Agriculture Sector
Small and medium-sized businesses are essential for the growth and stability of any economy. In the context of the agricultural sector, SMEs contribute significantly to value addition, employment generation, and technology transfer. Assam, known for its rich agricultural resources, is home to a diverse range of SMEs engaged in various farm activities such as crop production, horticulture, livestock rearing, food processing, and more.
These SMEs often need help accessing adequate financial resources, limiting their growth potential. Recognizing this gap, the Assam government has taken a proactive step by teaming up with Caspian Equity, a reputed investment firm, to launch a dedicated fund to support these enterprises.
The Collaboration: Assam Government and Caspian Equity
Caspian Equity, a well-established investment firm with expertise in supporting SMEs, has partnered with the Assam government to create a fund exclusively dedicated to promoting and investing in agriculture-based SMEs in the state. The fund starts at Rs 250 crore, and its primary goal is to offer financial support to qualified businesses. This assistance will be in equity investments, debt financing, and other customized financial instruments.
Objectives of the Fund
- Boosting Agricultural Productivity: The fund seeks to enhance agricultural productivity by supporting SMEs in producing crops, fruits, vegetables, and other agricultural commodities. This support may include investments in modern farming techniques, irrigation infrastructure, and technological advancements.
- Strengthening Food Processing Industry: The collaboration also aims to bolster the food processing sector in Assam. SMEs involved in food processing activities such as canning, packaging, and value addition will receive financial assistance to improve their infrastructure, upgrade machinery, and enhance product quality.
- Promoting Employment Opportunities: The fund aims to generate job opportunities in the agriculture and related sectors by offering financial aid to small and medium-sized enterprises (SMEs). This will reduce unemployment and increase rural incomes, ultimately leading to improved living standards.
- Encouraging Innovation and Technology Adoption: The collaboration between the Assam government and Caspian Equity aims to foster innovation and the adoption of modern technologies in the agricultural domain. To enhance productivity and efficiency, SMEs will be encouraged to invest in research and development, automation, and precision farming techniques.
Benefits for SMEs
SMEs in the agriculture sector of Assam stand to gain several advantages from this partnership:
- Access to Finance: The fund will provide much-needed financial assistance to SMEs, enabling them to expand their operations, invest in infrastructure, procure modern equipment, and upgrade technology.
- Technical Support and Guidance: Besides financial aid, SMEs will receive technical support and guidance from Caspian Equity’s team of experts. This assistance will help SMEs optimize processes, adopt best practices, and overcome operational challenges.
- Market Expansion Opportunities: The collaboration may also facilitate market linkages for SMEs, connecting them with domestic and international potential buyers. This exposure will enable SMEs to expand their customer base and explore new markets for their agricultural products.
The Assam government’s collaboration with Caspian Equity to launch a dedicated fund for SMEs in the agriculture sector marks a significant milestone in the state’s efforts to promote inclusive growth and development. By providing financial support, technical guidance, and market opportunities, this partnership aims to empower SMEs and catalyze the change in the agriculture industry in Assam. The fund’s success will benefit individual enterprises and contribute to the state’s overall economic prosperity by creating employment opportunities and enhancing agricultural productivity
