Growth of the Agrochemical Industry in India
The Indian pesticide market is growing rapidly, with a CAGR of 8% expected. The focus on increasing population, decreasing per capita availability of arable land, and increasing agricultural yields are key factors driving the Indian pesticide market. Increasing demand for edible grains, need to increase land productivity, the government encourages the use of uncontrolled fertilizers, new policies launched to encourage maximum fertilizer production, growth of pesticide market is the main factor in India.
India's agricultural sector is currently facing significant challenges such as shrinking arable land, shrinking farms, increasing pest attacks, and lower yields per hectare, which is positive for the Indian pesticide market.
The pesticide segment has approximately 55%, followed by fungicides and herbicides, which account for 18% and 16% of the Indian pesticide market. India's ability to produce at low cost, availability of technically trained resources, seasonal domestic demand, excess capacity, better price performance, and strong presence in the production of generic pesticides are the pesticide segment. It is the main factor driving the growth of India.
Grains, legumes, fruits, and vegetables are estimated to grow at a rate of 2% per year, with 4% contributing to overall agricultural growth. Grains and grains are projected to be dominant throughout the forecast period. Grains and grains are the traditional diets of the Indian people. Total domestic grain production is expected to reach a record 277.49 million tonnes in the year of harvest.
India has approximately 125 technology-grade manufacturers (10 multinationals), 800 formulators, and over 145,000 distributors. Sixty technical-grade pesticides are manufactured domestically. Specialized grade manufacturers sell large quantities of high-purity chemicals (usually in 200-250 kg drums) to compounders.
Low utilization rates characterize the pesticide market in India. In fiscal 2009, the total installed capacity was 146,000 tons, the entire production was 85,000 tons, and the operating rate was as low as 58%. The industry is heavily inventoried (due to seasonal and volatile demand from the monsoon), struggling with long-term credit to farmers, and centrally managing it’s "working capital."
India is a net exporter of pesticides to the United States and some European and African countries due to its low-cost manufacturing and low-cost skilled workers' unique strengths. Exports accounted for about 50% of the industry's total sales.
Insecticides: Insecticides are applied for killing insects. Consumption of cotton pesticides has decreased from 63% to 50% after BT cotton's introduction.
Fungicides: Fungicides are used to control the attack of diseases on crops. The growth of the Indian horticultural market with government support is driving the use of fungicides. The market share of fungicides is increasing.
Herbicides: Herbicides are the fastest-growing segment of pesticides. Their main competition is the cheap labor used to pull weeds manually. Weeds grow in hot and humid climates and die in the colder months, so sales are seasonal.
Biopesticides: Biopesticides are pesticides derived from natural substances such as animals, plants, bacteria, and certain minerals. The biopesticide market, which is currently a small segment, is expected to grow in the future with government support and increased awareness of non-toxic and environmentally friendly pesticides.
Others: Plant growth regulators, nematodes, rodenticides, fumigants, etc. Rodenticides and plant growth regulators are the protagonists of this segment. The plant growth regulator market is projected to grow at a compound annual growth rate of 6.8% from 2017, reaching the US $ 2.93 billion by 2022.
The Indian pesticide market is inherently highly fragmented, with over 800 formulators. The competition between players in many organized sectors and a significant proportion of fake pesticides is fierce. The market is undergoing mergers and acquisitions in which significant manufacturers purchase from smaller manufacturers.
Agriculture and related sectors continue to be the basis of the Indian economy, contributing nearly 17% of GDP in 2019-20. More importantly, it is a livelihood source for more than 50% of the country's population. As a result, sectors like pesticides are driven by significant government actions and interventions and are in a much stronger position than many other economic sectors.
The Indian pesticide market is worth Rs 38,000, which is almost evenly divided, with domestic consumption of Rs 20,000 and exports equivalent to Rs 8,000. Despite this blockade challenge, the agrochemical industry will continue to expand next year, and agricultural production is expected to grow.
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