In agriculture, agrochemicals perform a twin role, a productive role in terms of increasing the crop yield, and a protective role against the attacks of insects and pests. Though the application of agrichemicals is progressively increasing in Indian agriculture, the overall usage of agrochemicals when compared to other countries is still very low.
India has one of the lowest per capita consumption of agrichemicals per hectare. This signifies that there is a great scope of growth for the domestic agrochemicals industry.
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Agrochemicals or agrichemicals are chemical products used in agriculture to increase productivity. They are commonly defined as plant protection products which include herbicides, fungicides, insecticides, fertilizers, soil conditioners, algaecides, veterinary medicines and fumigants. These agrochemicals play a significant role in crop growth and are important in obtaining increased yields by preventing pest attacks and diseases, in the cultivated fields.
The use of agrichemicals in Indian agriculture has increased sharply since the adoption of the Green Revolution. Agrochemicals perform a productive role (in terms of increasing the yield) as well as a protective role (against attacks by insects, pests and other diseases).
India is the 4th largest manufacturer of agrochemicals in the world. During the year 2019-20, the Indian agrochemical industry was valued at about US$ 6 billion and is expected to grow at a CAGR of around 8% till 2025
Indian agrochemicals market is segmented by product type (fertilizers, pesticides, adjuvants, and plant growth regulators) and by application (crop-based and non-crop-based).
application
Though the application of agrichemicals is progressively increasing in the country, the overall usage when compared to other countries is still very low. While the consumption of agrochemicals in India stands at a little over 300 grams per acre, it is about 13 kg in China and 7 kg in the USA. It is worth noting that,
During the year 2022, India ranked among the top 5 agrochemical exporters (China, India, USA, France and Germany). Agrochemicals exported from India to the top 10 export destinations in 2021-22 were worth US$ 3324 million. The top ten export destinations during the year 2021-22 were Brazil, USA, Japan, Vietnam, Argentina, Australia, Belgium, China, France, and Indonesia.
Interestingly, India is also one of the largest importers of agrochemicals. In 2022, Brazil, France, Canada, USA and India were among the five largest importers of agrochemicals.
The following table shows export values of major agrichemicals exported from India during the period 2019-20 to 2021-2022.
Table: Top agrochemicals exported from India (2019-20 to 2021-2022) – (Value in US$ Million)
Source: Directorate General of Commercial Intelligence and Statistics (DGCI&S)
Over the years, there has been adequate evidence to prove that the non-use of agrochemicals or their replacement by natural and organic inputs/methods of production causes a reduction in crop yields. The crop yields under organic farming lessen by about 25% (on average) when compared to conventional crop yields.
On the other hand, the rising population* of India and its increasing affluence, are together spawning a shift in consumption patterns. Therefore, it is needed to not just increase production to meet the growing demand, but it is also equally important to ensure that the nutritional needs of the people are matched up. (*Population of India as of 2022 was 1.42 Billion, and it is expected to reach 1.66 billion by 2050).
However, as the demand for food products is climbing, the available land* for agriculture is reducing due to expanding urbanization. The diminishing arable land and loss of crops due to pest attacks/diseases, put forth a considerable challenge in ensuring food and nutritional security. According to the Indian Council of Agricultural Research (ICAR), approximately 30-35% of the annual crop yield is damaged/wasted due to pests. (*188.5 million hectares of arable land in 2020-21).
The need to improve crop productivity with a focus on the effective use of pest control measures and the adoption of weed management practices have together increased the agricultural output significantly. The adoption and implementation of such practices/measures as well as the growing demand for food products, are further driving the use of agrochemicals.
There are some issues that need to be resolved for India to attain self-reliance and to become a Global Manufacturing Hub for agrochemicals. For instance-
In recent times, social media connectivity has also brought about a significant change in agricultural practices, and farmers are now using the best molecules. The farmers must be appreciated when they are adopting the right agricultural practices and showing results.
Key factors like low manufacturing cost (driven by easy availability of labour and tax benefits); technically trained manpower; underutilized production capacity; seasonal domestic demand; and low usage, would be the other growth drivers of the agrochemical industry.
The EU-China trade war whereby tariff is being imposed on imports from China is an opportunity that India’s agrochemical industry can take advantage of.
With thousands of factories closing down in China due to tough environmental laws, the Indian agrichemical industry may focus on this emerging opportunity as well. Multinational companies like Cortiva, FMC, Bayer, and BASF, which were previously investing in China, are now looking towards India. So Indian agrichemical manufacturers need to focus on building up capacities accordingly to meet the forthcoming demand.
Indian agrochemical industry has the growth potential to exceed the current growth rate of 9% and become the next manufacturing hub for agrochemicals. However, for that, we need to have a holistic approach and also comply with ESG (environment, social, and governance) principles.
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