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To check MNC invasion in domestic fields — Pesticide makers draft `molecular plan'

Amit Mitra

MUMBAI, March 9

IN an effort to counter the assault on the domestic pesticide market by MNCs, which have brought in their own molecules, the Indian pesticide industry is gearing up to bring out its own exclusive array of molecules for insecticides, fungicides and herbicides.

The Pesticide Manufacturers' and Formulators' Association of India (PMFAI) has formed a `Molecule Group' with more than 30 companies as members. This group is in the process of tying up with the Hyderabad-based Indian Institute of Chemical Technology (IICT), a division of the Centre for Scientific and Industrial Research (CSIR), for bringing out the new molecules.

``We plan to bring out 10 new molecules within 12-18 months. These new products will significantly consolidate our market in the domestic segment,'' Mr Pradeep Dave, Chairman and Managing Director of AIMCO Pesticides Ltd and President of PMFAI, told Business Line.

About ten MNCs, including DeNocil, Isagro, Excel-Nufarm, Mitsui-Aventis and DuPont, have brought in a slew of new and specialised molecules during the last few years, which helped them gain a strong foothold in the domestic pesticide market. These new molecules have significantly replaced the old ones to an extent of about $10 million during the last three years.

``The only way for the Indian industry to counter the MNCs is by bringing out new molecules to match theirs. Otherwise, companies will have no other go but either to close down or amalgamate with the MNCs,'' Mr Dave said.

The Indian industry's efforts to launch new molecules will also help it meet the situation that would arise after India puts into practice the WTO regulations and the international patent laws in 2005. The new molecules will be marketed only by those companies which have become members of the Molecule Group.

The Indian pesticide industry, which comprises about 60 large-scale manufacturers and 350 formulators with a combined annual production of 60,000 tonnes, has been smarting under a host of problem, resulting in plummeting market share. ``Till recently the industry was registering an annual growth rate of 10-15 per cent but during the last three years it has flagged to a bare 3-4 per cent,'' Mr Dave pointed out.

The current fiscal has been particularly harsh for the pesticide manufacturers, with consumption falling to less than 50,000 tonnes, in the aftermath of the drought that hit 16 States.

``To top it all, the price of inputs such as emulsifiers, solvents, wetting agents, dispersing agents and packing materials, has increased by 15-20 per cent. The price of solvents, in fact, is increasing almost every alternative month. While this is the case, the depressed market conditions force us to keep the retail price low,'' Mr Dave said.

However, the industry expects the domestic market to grow in the years to come, especially as the per capita consumption is 600 g per hectare in India, as compared to 10 kg per hectare in some of the developed countries.

The domestic market scenario has forced most of the pesticide manufacturers to turn to the export market. Out of the combined turnover of Rs 4,500 crore, including that of formulations, the export turnover is almost Rs 2,000 crore. ``Exports have been the only silver lining for the industry during the last three years,'' Mr Dave pointed out.

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