A sensor-based automatic watering unit was developed to irrigate the paddy seedling trays. The watering unit comprised six flat spray nozzles with a direct current (DC) water pump and flow sensor, and these were kept at the top of the conveyor frame, which was actuated by a DC water pump with a solenoid valve to drop the water in trays. The actuation of the DC solenoid valve was controlled by a limit switch fitted to the conveyor frame, which sensed the moving trays on the conveyor. The performance of the developed unit was evaluated, and process optimization was performed using the Inscribed Central Composite Design in Response Surface Methodology. The effect of main operating parameters- chain conveyor speed (0.123, 0.196, and 0.27 m/s), spray operating pressure (1.5, 3.0, and 4.5 kg/cm2), and spray height (10,30 and 50 cm) on the performance of the sensor-based automatic watering unit was studied in terms of the amount of water spray requirement and coefficient of water spray uniformity in trays. The responses of the unit at its optimal parameter operation (spray operating pressure 4.5 kg/cm2, spray height 10 cm, and chain conveyor speed 0.14 m/s) were found to be 1.31 L/tray as the amount of water spray requirement and 92.41 % as the coefficient of water spray uniformity of the unit. Hence, it can be an efficient substitute with significantly less power consumption 41 W with a higher working capacity of 780 trays/h for watering into the paddy tray nursery. The developed sensor-based automatic smart watering unit saves irrigation water per square area of 68.90 %, 76.13 %, and 82.31 % compared to existing drip, sprinkler, and flood irrigation methods in mat-type paddy nurseries. The developed sensor-based automatic smart watering unit saves the watering cost INR 11,567.16 (140.02 USD) per hectare, reducing cost by 63.7 % compared to manual watering in the mat-type nursery preparation. Thus, an automatic smart watering unit in a paddy tray nursery offers consistent and uniform watering from an Indian perspective, promoting uniform germination, crop growth, and establishment. It conserves water by ensuring the right amount of water is applied at the right time, avoiding overwatering or under-watering.