INDIA UPDATE: India’s Evolving Agrochemicals Market
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By NICOLE WISNIEWSKI
CONTRIBUTOR
India’s progression as a bigger player in the agrochemicals industry is continuing its positive forward momentum.
According to EMR data, the India agrochemicals market size reached a value of almost $6 billion in 2022. The market is further expected to grow at a compound annual growth rate of 8.5% between 2023 and 2028 to reach a value of almost $9.82 billion by 2028.
“Stimulated by favorable domestic policies, the economy, and the investment environment, Indian companies have gone ahead and expanded production capacities, construction of new factories, launch of new products, and investments in building infrastructures,” said Amit Talesra, AVP, International Marketing, Meghmani Organics, which has expanded its current facilities and introduced new products with plans for more.
The India agrochemical industry is poised for sustainable growth for the next foreseeable five to seven years because the government is supporting the industry with its “Make In India” initiative, which aims to encourage domestic manufacturing. This is helping to reduce regulatory hurdles and upgrade the infrastructure necessary to boost the agrochemical sector.
“The government and industry have started investing heavily in research and innovation to develop new generation molecules, new isomers, new manufacturing processes, green chemistry products and new combinations and solo formulations to make India a global hub for the manufacture of agrochemical products,” says Simon-Thorsten Wiebusch, Country Divisional Head, Crop Science Division of Bayer in India, Bangladesh Sri Lanka.
Key Product Categories Driving India’s Growth
Before the pandemic, Indian agrochemical companies imported more than half of their raw materials, packaging, intermediaries and finished products from China.
“Backward integration spurred by the pandemic and buoyed by the ‘Make In India’ initiative, has helped change the status of Indian companies as serious players in the global market and is a step closer to making India a self-reliant supply chain hub,” Wiebusch said.
Indian companies have been innovating the production process technology for off-patent molecules with backward integration over the past five years to reduce reliance on China.
“They are investing aggressively on registering off-patent products,” Kulshrestha said, pointing to generics as one of the biggest growth areas for India. “In generics, Indian agrochemical companies have already begun moving in an upward direction by developing relationships with distributors to push volumes at more affordable prices than innovators.”
Indian agrochemical companies are manufacturing molecules of organophosphorus, carbon disulphide and pyrethroid chemistries by complete backward integration and “are known worldwide for impeccable quality and cost effectiveness,” Wiebusch says. “These products have got global acceptance and are exported in huge quantities from India. The current export turnover of India is $3 billion.”
“Traditionally, Indian manufacturers have been quite well backward integrated in the production of organophosphate compounds and pyrethroids,” agrees C.S. Liew, CEO, Pacific Agriscience Pte., Ltd. “More recently, they have overtaken China in pyridine and perhaps even in fluorine chemistries.”
“The backward integration on the intermediates is helping the agrochemical companies have control on the costs and also be assured of the supplies,” said Atul Churiwal, Managing Director for Krishi Rasayan Exports, adding that this gives them more control of the supply chain and greater likelihood of on-time deliveries.
On the contract manufacturing side, “India has emerged as the No. 1 choice of global MNCs for production of their patented molecules at lower costs,” Kulshrestha said.
In the biostimulants and biopesticides, India is still lagging, Churiwal said, “but now we see increased use of biostimulants in India, which will lead to new facilities and technologies being introduced.”
India Works to Overcome Challenges
India cannot make many intermediates due to the lack of availability of yellow phosphorous, Churiwal said. “We must look beyond China to try and find alternatives in countries like Vietnam to overcome this problem. Secondly, we must go for bigger plants specializing in production and not set up smaller, multipurpose plants as they do not have the economies of scale.”
In fact, Indian companies are lacking mega production facilities, which Chinese factories have, Churiwal said.
One challenge to this is that agrochemicals are unfortunately excluded from the government’s production linked incentive (PLI) scheme, which provides a 4% to 6% incentive on sales for goods manufactured in India.
“If agrochemicals were included in the PLI scheme, it would help attract new investments to rejuvenate this sector,” Kulshrestha said. “The government should restrict/regulate the import of agrochemical formulations into India, which can be manufactured in India from locally manufactured active ingredients and enough capacity is available with Indian manufacturers. This will benefit India by reducing foreign exchange usage and boost the government’s ‘Make In India’ efforts.”
As Liew says, the changing agricultural landscape in India offers new opportunities and challenges for technical grade pesticide manufacturers, as well as formulators and suppliers of inputs and services.
According to a Crisil report, India’s agrochemical industry’s revenues are estimated to grow 15% to 17% in 2023 and 10% to 12% in 2024 as India continues to benefit from the “China Plus One” strategy — primarily driven by strong exports and stable domestic demand. “The future growth of the sector is dependent on raw material availability and favorable weather conditions,” Wiebusch said. •