India’s agrochemical industry, currently valued at approximately $10 billion, is projected to grow to over $14.5 billion by the end of the fiscal year 2027-28, according to a report by Rubix Data Sciences. This forecasted growth represents a compound annual growth rate (CAGR) of 9%, despite a 3% decline in the 2023-24 financial year.
Challenges in the Previous Fiscal Year
The recent decline in the industry’s growth was attributed to several factors. A significant influx of competitively priced products from China created stiff competition for domestic manufacturers. Moreover, the export market, which constitutes over 50% of the industry’s revenue, experienced sluggish growth due to a global destocking trend, as international players opted to reduce their inventory levels.
Positive Long-Term Outlook
Despite these setbacks, the long-term outlook for India’s agrochemical industry remains positive. India has solidified its position as the world’s second-largest agrochemical exporter, with a trade surplus that nearly doubled from $1.8 billion in 2018-19 to $3.6 billion in 2022-23. The primary export destinations for Indian agrochemicals over the past five years have been the US and Brazil.
Government Support and Industry Initiatives
The Indian government has introduced several measures to bolster domestic manufacturing in the agrochemical sector. Agrochemicals have been designated as one of the 12 champion industries, and the import of unregistered pesticide formulations has been restricted to encourage local production. Despite not being included in the government’s Production-Linked Incentive scheme, the industry is making strides to overcome common challenges, such as competition from Chinese imports and a high reliance on generic molecules.
Shift Towards Sustainability
There is a growing interest in bio-pesticides and organic farming within the industry. Leading players are also making significant investments in achieving backward integration to reduce their dependence on imported raw materials. This shift not only aligns with global sustainability trends but also aims to enhance the resilience and competitiveness of India’s agrochemical sector.
India’s agrochemical industry, while facing challenges, is poised for substantial growth in the coming years. With strategic government support and a focus on innovation and sustainability, the industry is set to enhance its global standing and drive significant economic growth.
