India's
agrochemical sector is the fourth biggest in the world, with a market value of Rs. 40,000 crore. Despite its large market, agrochemical usage per hectare is just 0.6 kg per hectare, which is much lower than global averages.
The agrochemical sector in India has a significant untapped potential for expansion due to low levels of agrochemical usage in comparison to worldwide norms. In addition to expanding domestic demand, the Indian Agrochemicals Industry's exports might quadruple in the next four years if the correct strategies and technologies are implemented.
“India is the world's fourth-largest agrochemical producer. The government has identified the agrochemical industry as one of the 12 champion industries where India can play a significant role in the global supply chain, recognising its potential” says Agriculture Minister, Mr. Narendra Singh Tomar.
The importance of agrochemicals in achieving the vision of the USD 5 trillion GDP objective by 2025 cannot be overstated, as they not only assure food security and offer livelihoods, but they also spur the expansion of industry and service sectors. Government action in areas such as pesticide testing laboratories, enhancing sample processes, strengthening registration and importing processes will encourage appropriate investment and assist the agrochemical business thrive.
In this article let's look into the key trends of the Agrochemical industry in India that is expected to drive the growth of this segment.
Developing Environmentally Safe Pesticides
India's agrochemical industry is now focusing on generating ecologically friendly pesticides. According to the Federation of Indian Chambers of Commerce and Industry, the Department of Chemicals has launched a statewide effort to "develop and produce neem products as environmentally friendly pesticides" with funding from the United Nations Development Programme (UNDP).
The biopesticides are an important ingredient of Integrated Pest Management (IPM) packages due to their capability in maintaining the natural diversity without the use of any artificial or synthetic residues. The origin of Biopesticides can be microbial (bacteria, fungi or virus), herbal (plant extracts) or genetically modified plants (GM). Beauveria spp, Trichoderma spp, and Bacillus spp, are some of the microbial biopesticides. Products made out of garlic and neem are used extensively as herbal biopesticides.
Traditionally, GM varieties resistant to particular pests are used in crops (e.g. Bt Brinjal) and cotton (Bt Cotton).
Increased R&D
In recent years, there is an increasing realization that the Indian chemical industry is forsaking long term gains by adopting a myopic view. The demand for agrochemicals is on an increasing trend, thanks to the growing awareness and willingness of the farmers to invest in the crops. So is the need to create products that benefit the local farmers and suit their agricultural conditions. New molecules will also add to India’s intellectual property and this brings substantial gains for companies in the longer run.
However, foresight is crucial here. Indian companies should be ready to make long term investments and willing to withstand longer gestation periods for R&D to reap fruits. The right approach is to strike a balance between marketing generic agrochemicals and inventing new ones. Time is ripe for the Indian industry to take a new plunge and graduate to the next level.
While key trends like Environmentally friendly pesticides and surge in R&D activity are expected to boost the growth of the Agrochemical market in India, there are multiple hurdles that can pause this growth ride.
Lack of robust distribution system
The supply chain of the agrochemicals industry is one of the most complex chains. The Indian Agrochemical supply chain consists of technical grade manufacturers, formulators producing end products, distributors and end use customers. There are about 125 technical grade manufacturers, including about 10 multinationals, more than 800 formulators and over 145,000 distributors in India.
The top 10 companies capture the share of 75-80% in the whole market. The market share of large players depends primarily on product innovation and effective distribution channels. The market witnesses a number of mergers and acquisitions with large players buying out small manufacturers. Many companies seek distributors and form strategic alliances and partnerships in order to expand their market reach.
Integrated Pest Management & rising demand for organic farming
Promotion of IPM, zero budget farming and usage of bio-pesticides by the Indian Government and NGOs is gaining momentum. With increasing demand for organic food, farmers in certain states like Karnataka have reduced chemical usage and have adopted organic farming. Agrochemical companies will have to tackle the rising environmental awareness and address concerns on the negative impact of pesticide usage.
The Future Roadmap
Use of agrochemicals for crop protection is likely to increase in future due to the simple reason that its share in Agri-input cost is still minimal as compared to other Agri inputs and still only about 30% of agricultural area comes under the umbrella of crop protection chemicals. Many of the products becoming generic and the indigenous industry having sound infrastructure and technological know-how to produce technical grade as well as specialized type of formulations add up to the agrochemicals basket available to the farmers for crop protection.
Thus, the demand of agrochemicals would be ever increasing in view of increasing population and food demand; decreasing size of agricultural land due to urbanization; demand of quality agricultural product; regional economic growth etc.
