India’s agrochemical industry in recent years has witnessed enormous growth, positioning itself as a major contender in the global market. With a market size that took off to nearly $6 billion in 2022 and a projected compound annual growth rate (CAGR) of 8.5 per cent between 2023 and 2028, reaching an impressive value of almost $9.82 billion by 2028, India’s agrochemical ecosystem is on an upward trajectory.

In 2022, India secured the position of the second-largest exporter of agrochemicals globally, as reported by the World Trade Organization (WTO). The country’s agrochemical exports, valued at $5.5 billion, surpassed those of the US, standing at $5.4 billion. This surge in exports contributed to a substantial trade surplus of INR 28,908 crore in the fiscal year 2022-23. The sector’s revenue is projected to increase by 10-12 per cent in 2024, backed by robust export figures and steady domestic demand.

Looking at these figures, India’s prospects as a global manufacturing hub remain strong. Alongside a comprehensive roadmap including collaborative partnerships and regulatory compliance, India is well-positioned to meet domestic agricultural needs and emerge as a frontrunner in addressing global agricultural challenges.

Government initiatives, manpower fuelling industry growth

One of the country’s core advantages lies in its abundant pool of skilled human resources combined with lower production costs and an expansive consumer market. The country stands out in terms of demographics and the availability of technical talent. Its unique geographical advantage with major refineries and petrochemical plants along the coastline provides easy access to petrochemical feedstock and key demand centres, facilitated by efficient port infrastructure. The rising income levels and a youthful population have fuelled a consumption-driven economy, driving demand across various sectors. This combination enables Indian manufacturers to offer competitive pricing for generic agrochemicals, attracting global attention and driving export volumes. The cost-effectiveness and quality of Indian agrochemical products places the country as a preferred destination for agrochemical manufacturing.

Moreover, the Centre’s “Make In India” initiative has been instrumental in propelling the agrochemical industry forward. By promoting domestic manufacturing, reducing regulatory barriers, and facilitating infrastructure development, this initiative has created an enabling environment for industry players. Alongside Aatmanirbhar Bharat Abhiyan which emphasises self-reliance and resilience in key sectors of the economy including agrochemicals to promote domestic manufacturing, reduce dependency on imports, and enhance competitiveness. The government also plans to implement a production-linked incentive system for the agrochemical sector, offering output incentives ranging from 10 per cent to 20 per cent. This scheme aims to boost domestic manufacturing, create employment opportunities, and enhance India’s global competitiveness.

India’s stringent laws and regulations regarding the manufacturing of chemicals, including fertilizers, have gained recognition globally. Before being released into the market, pesticides in India undergo rigorous checks and balances mandated by the Insecticides Act of 1968 and The Insecticide Rules of 1971. These regulations oversee the import, manufacture, sale, transportation, and distribution of insecticides to ensure the safety of humans and animals. The Central Insecticides Board and Registration Committee play a pivotal role in advising the government on insecticide manufacturing under the Industries (Development and Regulation) Act of 1951. They evaluate insecticides based on their toxicity, suitability for aerial application, dosage, frequency of use, and potential threats to handlers. This adherence to global standards builds trust among consumers worldwide and reinforces India’s reputation as a reliable source of high-quality agrochemicals.

Collaboration and innovation

Indian agrochemical industry struggled with challenges such as the limited availability of certain raw materials and the absence of mega-production facilities for a long. However, these challenges are addressed by strategic interventions such as capacity building for backward integration, R&D investments to enhance process efficiencies and reduce costs, and fostering a conducive regulatory environment to encourage innovation and sustainability.

The Indian agrochemical industry has made significant strides in establishing state-of-the-art manufacturing facilities to meet both domestic and global demands. This has resulted in a notable decrease in the import of agrochemicals over the long term. Renowned worldwide for its production efficiencies, product efficacy, quality, and competitive pricing, the industry continues to thrive.

One of the primary drivers behind India’s growth in the agrochemical sector is the backward integration of production processes. Indian companies have strategically invested in producing off-patent molecules, thereby reducing their dependence on imports from China. Furthermore, there is a concerted effort to register off-patent products and foster relationships with distributors to increase volumes at more accessible price points.

To encourage innovation and technological advancements, the government provides support for R&D activities in chemicals and agrochemicals. This includes funding programs, collaboration opportunities with research institutions, and incentives for developing new products and processes. These government initiatives collectively aim to promote growth, innovation, and sustainability in the agrochemicals and specialty chemicals industries,

Collaboration between domestic agrochemical manufacturers and global entities has catalysed technology transfer and knowledge sharing. This collaboration has spurred innovations in manufacturing processes, the development of new molecules, and a heightened focus on environmentally sustainable practices. Manufacturers are increasingly focusing on sustainable raw materials, exploring bio-pesticides, and developing formulations requiring minimal quantities for effective pest control.

In essence, agrochemicals play a pivotal role in driving agricultural productivity and ensuring food security for India’s population of 130 crore people. The government’s adherence to fast-tracking agrochemical projects indicates a positive trajectory for the industry, with export revenues projected to reach $10 billion in the coming years. The future of India’s agrochemical industry looks promising, with revenues estimated to grow significantly driven by favourable government initiatives, increased exports, and stable domestic as well as global demand.

The author is Managing Director, Best Agrolife Ltd

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