• Transformative technological solutions are increasing in the agricultural sector, leading to the rise of over 1,300 start-ups aimed at addressing the untapped potential of the agri-tech Up until 2021, India received investments of over $1.6 billion in agri-tech, being the third highest globally.
• The use of drones in the agriculture sector has risen significantly, with several novel applications in aerial seeding, pesticide spraying and remote data collection for research. Future possibilities are limitless, where drones may even replace tractors one day!
• India’s Drone Rules — regulations that authorise civilian use of the technology were only introduced in August 2021 and broadly categorise unmanned aircraft systems (UAS) based on a two-fold classification. Despite recognising autonomous UAS as a separate category, the Drone Rules do not provide any specifications or guidelines for such aircraft systems.
• India’s agri-tech sector is increasingly leveraging this technology. In 2020, the Haryana government engaged pesticide-spraying drones to tackle locust attacks on crops. For this, an authorisation from the Ministry of Civil Aviation (MoCA) was sought by the Ministry of Agriculture and Farmers Welfare.
• Some other prominent applications are aerial seeding, chemical and pesticide spraying (which not only avoids human contact but also the multispectral sensors identify optimum locations for application, enabling a greater degree of precision), aerial imagery and data collection on aspects such as crop health assessment, monitoring of water resources, soil analysis, damage analysis, livestock tracking, among others.

Regulatory points

• Drone technology is a rapidly developing space and unsurprisingly, the regulatory environment is continuing to evolve and yet to take a concrete shape.
• Registration requirements are fairly strict. Unless specifically exempted, each drone is required to be mandatorily registered with a unique identification number on a Digital Sky Platform (DSP). Any subsequent transfer of ownership of a drone, or a change to the flight control module or remote pilot station is required to be updated on the DSP.
• Additionally, drone operators (other than small to medium-sized drones up to 2kg for non-commercial use) are required to hold a valid remote pilot certificate – which is non-transferable (even to employees of the same company with which such pilot is employed).
• Privacy is a major concern that looms over the trajectory of this sector since aerial vehicles come equipped with sophisticated sensors and cameras.
• Currently, the Drone Rules do not adequately address privacy concerns although, the Unmanned Aircraft Systems Rules 2021, which were in force briefly (until superseded by Drone Rules), imposed obligations on the drone operator to address privacy concerns.
• The import of drones in completely-built-up, semi-knocked-down and completely-knocked-down forms (with limited exceptions for government-use, R&D and military purposes) has been banned by the government. That said, no such restrictions apply to import of drone components.
• Drone technology is being viewed as a green alternative to certain conventional agriculture resources.
• Businesses exploring drone technology could potentially attract investment from ESG-focused funds.

 ESG Funds

• They are used synonymously with sustainable and socially responsible investing. 
• While selecting a stock for investment, an ESG fund shortlists companies that score high on environment, social responsibility, and corporate governance, and then looks at financial factors. 
• With the overall increase in awareness, and with regulations moving in this direction, investors are re-evaluating traditional approaches and considering the impact of their decisions on the planet.
• The key difference between the ESG funds and other funds is ''conscience'' i.e the ESG fund focuses on companies with environment-friendly practices, ethical business practices and an employee-friendly record.
• The fund is regulated by Securities and Exchange Board of India (SEBI).

Significance

• The companies will be forced to improve governance and ethical practices, and act with greater social and environmental responsibility.
•  As the policy framework changes, companies that do not alter business models or become more environmentally sustainable, could have their revenue and profits impacted in the long term.
• Globally, many pension funds and sovereign wealth funds do not invest in companies that are seen as polluting or socially not responsible.

Reasons Behind ESG growth

• The greater policy focus on aspects such as cleanliness, skill development, expanded healthcare coverage, and education indicates potential public investment in these social development and environmentally sensitive sectors of the economy. 
• There is increasing awareness and understanding among younger investors about the impact of business on social development and environment.
• The companies that are part of the ESG or NSE Prime will not only be on the right side of regulations and benefit from it in the long term, but will also have a better reputation and potentially command a premium on valuation in the long run. 

Areas of concern

• Alongside the greater attention on issues such as climate risk, emissions, supply chains, labour rights, anti-corruption, etc., certain concerns have been flagged as well.
• Greenwashing is one of the top concerns among global institutional investors.
• Greenwashing is considered an unsubstantiated claim to deceive consumers into believing that a company''s products are environmentally friendly.
• Investment experts have also pointed to the tendency of fund managers to over-weigh certain stocks and companies in a situation where most large investment-friendly companies have fallen short of the qualitative and quantitative parameters used for ESG investing.