India and China: The Struggle for Crop Input Dominance Continues
4 October 2023 India has emerged as a strong competitor to China in the agricultural inputs market, aiming to reduce China’s dominance in supplying crop inputs to manufacturers and distributors, writes Dan Jacobs in a recent issue of AgriBusiness Global DIRECT. The COVID-19 pandemic and Chinese environmental policies that limited product availability have provided an opportunity for India to make inroads in this sector.
However, Chinese companies are not willing to give up their top spot without a fight. The volatile situation in the past few months, with declining raw material prices but even higher drops in finished goods prices, has posed challenges for Indian manufacturers. The dependence on China for product availability and the increasing or decreasing nature of this dependence is a key concern for Indian manufacturers. They also face pricing and distribution challenges when Chinese manufacturers dump products on the market.
For example, Indian manufacturers were selling the fungicide azoxystrobin at a lower rate than Chinese providers in 2022. However, due to a crash in raw material prices in China, there has been a surge in imports of azoxystrobin from China, leading to a reversal in the market dynamics. A similar trend has been observed with the herbicide glufosinate.
Chinese companies have been accused of dumping products below costs, making it difficult for Indian manufacturers to compete. While the dumping approach may win short-term business, it is not sustainable in the long run. Indian manufacturers are ready to compromise on profit, but not at the expense of selling below raw material costs.
Despite the challenges, Indian manufacturers are optimistic about the future. Strategic partners, who seek long-term relationships, continue to look at both India and China for options. Opportunistic buyers, on the other hand, consider both countries based on their immediate needs. Multinational companies are increasingly looking towards India for contract manufacturing, but if prices remain high, the spot purchase business may return to China.
In conclusion, India is making significant strides in the agricultural inputs market, challenging China’s dominance. While Chinese companies are putting up a tough fight, Indian manufacturers are determined to reduce their dependence on China and establish themselves as key players in the industry. The competition between the two countries will continue to shape the dynamics of the global agricultural inputs market.
Read the full report in AgriBusiness Global DIRECT.
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