Indian agrochemical industry set for a growth phase
The Indian economy traditionally being an agrarian economy has
seen a tectonic shift from an agriculture industry based economy to become
a service industry based economy. More than half of its population is dependent
on agriculture as its primary occupation.
The Green Revolution in the early 1970s helped India become a
food surplus country from a food deficient country and currently ranks amongst
the top 15 exporters of agricultural products in the world. However, despite
all these achievement the agriculture sector is facing a number of issues which
includes reduction of arable land, lower per hectare yield, increase in pest
attacks and lower farmer income. This is where agrochemicals have an important
role to play.
Agrochemical landscape in India
India is currently the 4th largest manufacturer of agrochemicals
after The United States, Japan and China. Currently, its agrochemicals market
is valued at $4.1 billion and is expected to grow at a growth rate of 8.3
percent to reach $8.1 billion by 2025.
Exports are expected to fare even better and are expected to
grow at a rate of 8.6 percent to reach $4.2 billion by 2025. In spite of these
achievements the country lags in terms of usage of agrochemicals. Per hectare
consumption of agrochemicals is currently less than 1 kg which when compared to
other developed countries, is less in volume terms. Presently, the maximum use
of crop protection chemicals is seen in paddy cultivation followed by cotton.
Bifurcation of agrochemicals
Currently agrochemicals are broadly divided into two main types:
Soil Nutrients, Crop Protection Chemicals. The further bifurcation of Crop
protection chemicals is as mentioned below.
·
Insecticides: These chemicals are used to protect pest attack on
the plants.
·
Fungicides: These are used to control spread of diseases caused
by fungus in plants and animals.
·
Herbicides: These are used to control the growth of weeds in the
cultivation area.
·
Bio Pesticides: These are generally derived from natural sources
like animals, plants, bacteria and other minerals.
·
Others: These includes Plant Growth Regulators, Nemotocides,
Rodenticides, fumigants etc.
Reasons for Increased use of Agrochemicals in Domestic Markets
The current use of agrochemicals in the Indian market is very
low and is approx. 0.65 kg per hectare which is far less as compared to The
United States where it is 4.58 kg per hectare. This low consumption of
agrochemicals in one of the reasons for the low yield per hectare production of
agricultural products in India. Also, around 25 percent of the total crops
produced in India are destroyed due to pest attack.
Agrochemicals can play an important role in curbing the pest
attacks this leading to increased productivity.
Also the world population is growing at a rapid pace. India is
currently home to approx. 18 percent of the world population whereas covers
only 2 percent of the landmass. There is a surge in demand to meet the dietary
needs of this ever increasing population, however the arable land remains
constant, hence there is a need to increase the per hectare production which
can be done by efficient use of agrochemicals. Currently, India ranks amongst
the top 15 manufacturers of agricultural products. With the increase in
agricultural production, there will be huge scope for export of these products.
Horticulture and floriculture have also started gaining
prominence in India. The Government of India with an eye on increasing the
production of agricultural products has been launching various schemes like
‘Mission for Integrated Development of Horticulture’ etc. This has led to
increased use of agrochemicals, mainly fungicides.
There has been a lot of awareness amongst the farmers regarding
the use of agrochemicals, and the right way for its applications. Also, it has
been one of the key objectives of the Prime Minister of India Narendra Modi to
“Double farmers income by 2022.’ Thus, there will be a definite increase in
consumption of agrochemicals and soil nutrients.
Developing India as an Agrochemical Manufacturing Hub
In the past couple of years there has been a significant
reduction in the exports from China. This is owing to the implementation of
stringent environmental norms by the Chinese government, crackdown on the
polluting chemical industry and impending duties from US on Chinese products.
There has been a large scale shutdown of plants which are causing pollution,
relocation of chemical plants to far off industrial areas as well as compulsory
effluent treatment plants for every chemical plant. As a result China’s exports
have been severely dented. On the other hand Indian Chemical
Industry performed extremely well in terms of exports. In the
case of manufacturing of agrochemicals, India is being noticed as a
manufacturing hub. The Government of India through its ‘Make In India’
initiative has been inviting various national and international companies to
manufacture and expand operations in India. Many companies are now looking to
source chemicals from India in order to de-risk their sourcing from China. In
addition to that, there are numerous other reasons for MNCs investing in India,
few among those are low capex, availability of skilled manpower at low cost,
infrastructure advancement, to name a few. It is important that the industry
takes notice and grabs the opportunity to establish India as a global chemical
manufacturing hub and eventually creates a healthy, thriving ecosystem.
Export Markets
As per a report by the Federation of Indian Chambers of Commerce
and Industry (FICCI), India exported crop protection chemicals worth $2
billion. The country is the 4th largest manufacturer and the 13th largest
exporter of agrochemicals globally. Also, at present the manufacturing capacity
utilization is not 100 percent, leaving a huge scope for exporting the surplus
production. India has been traditionally exporting agrochemicals to the US,
Europe and some Latin American countries. However there tremendous export
potential to markets such as Africa, Middle East and East Asia.
Way Forward
The current Indian Agrochemical scenario presents an exciting
growth opportunity for chemical manufacturers. The agriculture industry is set
for a fast paced growth, which will lead to increased use of agrochemicals.
Also with the current manufacturing capacities being under-utilized there is
major scope to improve capacity utilization for export production. These increasing
volumes will lead to significant increase in employment, exports, new product
development, decrease in imports, which will support the ‘Make in India’
campaign and ease of doing business. However while gearing up for this growth
phase we must also ensure that the growth is a Sustainable one.
Author: Rajendra Gogri is Chairman and Managing Director of
Aarti Industries Ltd.
© Chemical Today magazine
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