Agri Investment Platforms: From benefits to risks; all you need to know

But earlier you leap successful and blindly spell ahead, you request to research the risks and rewards associated with specified investments. This nonfiction digs deeper into the imaginable benefits and hidden risks to assistance you marque an informed decision.

What are these platforms each about?

Agriculture income has been tax-free successful India owed to assorted reasons. Unpredictable climatic conditions, uncertainty of harvest and seasonal variations are a fewer of the reasons down the same.

Considering it to beryllium an opportunity, a fewer agri-investment platforms person travel into the picture. They let retail investors to put successful agriculture opportunities and gain a tax-free income.

How bash these platforms work?

A retail capitalist makes an concern successful these platforms via the website oregon mobile app successful an online mode. Usually, helium oregon she whitethorn beryllium asked to motion the LLP (Limited Liability Partnership) statement and implicit authentication.

The investments are pooled from each the investors and invested further. For example, these whitethorn beryllium further invested to lease cultivation onshore oregon put successful projects related to agriculture.

Now, the merchandise is sold and gross is generated. After deducting definite expenses specified arsenic salaries, rent, earthy worldly costs, etc., the remainder is distributed among the investors.

Risks involved

Investment successful cultivation schemes similar these is not ever sunshine and rainbows. It comes with its stock of risks and uncertainties.

Firstly, profits are not assured. Though they whitethorn warrant fixed returns, if the steadfast incurs losses, you volition person to incur them arsenic a partner. Weather uncertainties tin effect successful nonaccomplishment of nutrient which whitethorn pb to a precocious hazard of losing returns connected investments.

Then, these platforms are not regulated by SEBI oregon RBI. So, determination is nary authorization to power oregon show the activities of specified platforms.

In 1990, the Anubhav Plantations scam lawsuit was a large fiscal scandal. Returns were guaranteed and investors were lured to marque investments. However, the strategy collapsed owed to respective reasons successful 1997-98 leaving aggregate investors losing their money.

Recently, SEBI has banned agri-investment level Growpital from collecting wealth from investors.

Benefits of agri investing

• Diversification of portfolio: Investment successful specified projects allows you to diversify your portfolio. It further helps successful reducing wide hazard by spreading investments crossed antithetic sectors.
• Tax-free income: As cultivation income is not taxed, returns from these schemes are not taxed arsenic well.
• Fixed returns: Usually, these platforms committedness a fixed instrumentality arsenic mentioned successful the declaration which is different crushed to invest.

Who regulates these platforms?

Currently, these agri-investment platforms are operating successful a spot of a shady area. They are not straight controlled oregon monitored by authorities similar SEBI (Securities and Exchange Board of India) oregon RBI (Reserve Bank of India). These agri-investment platforms enactment arsenic facilitators,

Some platforms

• Growpital
• FAAB Invest
• Kisaan Parivar
• KrishiFunds
• Farm Chakra

There are respective platforms that let you to enactment wealth into cultivation projects and marque tax-free income. However, it is recommended to execute elaborate probe earlier investing successful specified platforms.

Here are definite questions you tin inquire them earlier investing your money:

• Would you inactive get guaranteed returns if an LLP incurs a nonaccomplishment arsenic mentioned successful the agreement?
• Can you person entree to their fiscal statements?
• Who manages the platform/investments and what qualifications/experience bash they possess?
• Do they person a inheritance oregon grounds of controversies if any?
• How would the LLP resoluteness immoderate quality that mightiness arise?

Risks

Weather risk: Agriculture is babelike connected weather. While the farms of these platforms mightiness usage precocious technology, it would beryllium omniscient to see the interaction of upwind connected harvest production.

Liquidity risk: While platforms mightiness honour your redemption requests wrong a fewer days, however, arsenic cultivation nutrient is harvested successful batches, investors mightiness person to hold for the adjacent batch to deed the marketplace earlier they tin get their wealth back. It is important to support that successful caput arsenic well.

In conclusion, though these investments connection lucrative returns, it is not advisable to put blindly. Tax-free returns shouldn't beryllium the lone crushed to put money. Purchasing specified investments involves precocious hazard arsenic returns are not guaranteed and you whitethorn adjacent suffer your superior invested. 

Hence, these platforms are recommended lone for those folks who recognize the workings of these schemes and person a high-risk appetite.

Padmaja Choudhury is simply a freelance fiscal contented writer. You tin scope retired to her astatine padmaja@padmajachoudhury.com.
 

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Published: 10 May 2024, 05:11 PM IST