Why Is India’s Agrochemical Market Growing So Fast?

Ag tech, biologicals, research and  development (R&D), and technical manufacturing are on the rise in India, as the country’s agrochemical market continues to grow in the wake of China’s port shutdowns and other difficulties due to COVID.

In 2020, Kynectec’s AgMarket Insights Principal Consultant Bob Fairclough ranked India as the fastest growing agrochemical market “of significant size” for the past decade.

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In 2022, Indian agrochemical companies increased backward integration and use of international storage warehouses to continue producing and expanding to meet global demand through the pandemic and after. Companies like Meghmani Organics Limited is investing $100 million capital expenditure on expansion and new production facilities, while introducing nine new molecules.

Atul Churiwal, Managing Director for Krishi Rasayan Exports, says, “In the next two to three years, technical manufacturing will be an opportunity in India, because of China’s challenges.

There’s a great opportunity for India to beef up its capacities for the technical side. Exports are increasing in a big way. More and more businesses are going into technical and contract manufacturing as more multinationals look toward India.”

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Amit Momaya, Regional Head-International Business for Hemani Industries Limited, says another opportunity are in generics. “Products worth $4.2 billion are expected to go off patent by 2023, and that will present opportunity for manufacturing 26 active ingredients as generic molecules,” says Momaya.

The Indian government recognizes its agrochemical industry as one of its top 12 industries to achieve global leadership growing at 8% to 10% through 2025, according to the Federation of Indian Chambers of Commerce and Industry.

According to business magazine Inventiva, major players in India include Bayer CropScience, Syngenta AG, UPL Limited, BASF SE, National Fertilizer Limited, and TATA Rallis. Agrochemical exports were estimated to reach $3.8 billion in 2021 having grown at a compound annual growth rate (CAGR) of 16% from 2016 through 2021, with exports going to the top four countries of Brazil, United States, Japan, and China.

Top produced active ingredients include mancozeb, 2,4-D, acephate, chlorpyrifos, cypermethrin, and profenofos.

The Economic Times reported India’s domestic agrochemical market is around $2.8 billion and uses around 62,000 mt (75% insecticides and fungicides, 15% biopesticides).

A developing opportunity remains in biostimulants and biopesticides as the Indian government continues promoting sustainable agriculture. This push is inspiring companies like Pacific Spot Limited to diversify their portfolio by investing in a microbial platform with a focus on biostimulants and biocontrol.

“Farmers of India are now looking for efficacious and environmentally safe products, which are effective for control of pests at very low doses of few grams per hectare,” says Jitendar Mohan, Chief Operation Officer for Willowood India. “These products are limited in availability in India, but there exists a huge demand to develop these products, which can be benefit for all the stakeholders and will also help in further promoting the export of agricultural produce of the country.”

Government Initiatives

With 174 million hectares of agricultural land and a large domestic demand for agricultural products, the Indian government is wanting to double farmers’ income in the next five years to increase production.

With 54.6% of the population’s livelihood in agriculture with two planting seasons (kharif – April to September) and (rabi-October to March), crop production reached 331 million mt in 2021, an increase of 10.5 million mt from 2020, including pulses, grains, natural fibers, sugarcane, vegetables, and fruits, including grapes, banana, and mango. The Ministry of Agriculture and Farmers’ Welfare reported that for FY 2021-22, the Indian government set a crop production target of 151 million mt for kharif season, focusing on rice planting, and 155 million mt for rabi season, focused on wheat.

To meet these goals, the government is promoting new technologies in crop inputs and ag tech to improve harvests. The Economic Times reported that 15% to 25% of India’s crops are lost to pests, weeds, and diseases, opening a need for crop protection and soil enhancement. India’s growers traditionally have a low consumption of agrochemicals at a rate at 0.6 kg per hectare. Out of the 174 million hectares of agriculture land in India, 137 million (79%) hectares are covered by chemical and biopesticides, says Mohan.

A shift in farming is happening as Indian growers, who have tended to be treatment based, are now moving toward prevention.

“India has been a small domestic market,” said Churiwal. “But now with the capacity being increased, manufacturers have the option to fall back on the Indian market, which is now about $3 billion and growing at around 10% to 14% per year.”

To assist in this change, the Government of India created a network of 729 Krishi Vigyan Kendras (farm science centers), established at the district level across India, to ensure growers could access improved seed varieties, crop protection, and ag technology.

Another area for opportunity in the domestic market is fertilizer. With the Ukraine-Russian conflict creating a huge deficit in potash for India, which imports 3 million tonnes from Russia and the Ukraine.

The Fertiliser Association of India is seeking fertilizer from Jordan, Morocco, and Canada, while the government allocated $14 million to its fertilizer subsidy program in February according to Quartz India.

With the urgent need for potash, companies like ICL, a specialty minerals company, signed a long-term agreement with India Potash Limited (IPL) to supply polysulphate through 2026, in the aggregate amount of 1 million metric tons. Polysulphate, which contains sulfur, potassium, magnesium, and calcium, lacks chemical processing to meet both the demand for fertilizer and the government’s push for organic farming methods.

Ag Tech

While most Western ag tech farming methods haven’t worked in India due to the country’s fragmented small farms, averaging 0-2 hectares, ag tech that has been successful includes drones and satellite technologies for assisting growers in strategizing against weather conditions and engaging in efficient farming for higher productivity. In April 2022, India’s Ministry of Agriculture and Farmers’ Welfare issued a two-year approval for drone-based spraying for most registered pesticides to address destruction from locusts. Since then, there have been discussions about government policies being created for regulating drones. IndiaTVNews reported that Prime Minister Narendra Modi stated as part of his Independence Statement on 15 August 2022 that new policies would not hinder the emerging drone market or its use.

The Indian government also launched the Digital Agriculture Mission for 2021-25 to include artificial intelligence, remote sensing, drones, robots, and other technology with grants for drone procurement.

“Drones are being promoted by Indian Government in a big way,” said Abhijit Bose, Chief Marketing Director for Tagros.

Many companies like Dhanuka Agritech and CrystalBall are investing in this area. Artificial intelligence-based companies like Cropin are developing smart farming apps.”

Mohan says other ag tech being used currently is automatic sowing machines, tractor mounted sprayers, automatic picking machines, smart irrigation and fertigation systems, cold storages, and temperature regulated transport chains.

From investors, India ranks third in the world for ag tech funding and start-ups. By 2025, the Economic Times reported that it is estimated that Indian ag tech companies will receive $30-35 billion in investments, increasing from the $190 million of 2021.

Regulations

In April 2022, the Government of India officially created regulations for biostimulants, requiring a license to sell and testing products to meet certain standards. “Some people used to sell anything and everything in the name of biostimulants, because it was simple to start,” says Narayan Nair, Head of Sales and Marketing for Gharda Chemicals Limited. “Therefore, it became necessary to bring it under government regulations to avoid misuse.”

This new policy presents an opportunity for legitimate manufacturers to increase their business, by picking up the slack from fly-by manufacturers who aren’t interested in meeting the new requirements. “For the established companies, this could be an opportunity for a $1.5 billion market,” says Churiwal.

For agro chemical regulations in India, Mohan says, “As of 30 June 2020, 273 molecules and 746 formulations are registered in India. Compared to India, as of 31 October 2020, around 473 molecules are registered in the European Union (EU) and 527 molecules are registered in Japan.”

Mohan attributes these low numbers to the lack of “legal provision for data protection in India, therefore, multi-nationals and prominent domestic companies are wary of bringing new molecules into the country as there is a high probability of me-too registrations being granted immediately after the first-time registration of the molecule in the country. This has led to the situation of less new generation molecules available in India as compared to global availability or being registered in the country after more than 10 to 15 years of global availability.”

To combat this, the agrochemical industry and Indian regulatory authority are working together to streamline India’s registration process and “upgrade to global levels to match with the systems prescribed by FAO and available in developed countries,” says Mohan. “We are now focusing on only good laboratory practice (GLP) data that is acceptable across all disciplines and internationally.”

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