Indian Pesticides Industry... Vital for ensuring food security
 
Agriculture is the lynchpin of the Indian economy. Ensuring food security for more than 1 bn Indian population with diminishing cultivable land resource is a herculean task. This necessitates use of high yielding variety of seeds, balance use of fertilisers, judicious use of quality pesticides along with education to farmers and the use of modern farming techniques. It is estimated that India approximately loses 18% of the crop yield valued at Rs.900 bn due to pest attack each year. The use of pesticides help to reduce the crop losses, provide economic benefits to farmers, reduce soil erosion and help in ensuring food safety & security for the nation.
 
The Indian pesticide industry with 85,000 MT of production during FY 07 is ranked second in Asia (behind China) and twelfth globally. In value terms, the size of the Indian pesticide industry was estimated at Rs.74 bn for 2007, including exports of Rs.29 bn.
 
Globally, due to consolidation in the industry, the top five global MNCs control almost 78% of the market. In India, the industry is very fragmented with about 30-40 large manufacturers and about 400 formulators.
 
The per hectare consumption of pesticide is low in India at 381 grams when compared to the world average of 500 grams. Low consumption can be attributed to fragmented land holdings, low level of irrigation, dependence on monsoons, low awareness among farmers about the benefits of usage of pesticides etc. India, being a tropical country, the consumption pattern is also more skewed towards insecticides which accounted for 64% of the total pesticide consumption in FY07.
 
India due to its inherent strength of low-cost manufacturing and qualified low-cost manpower is a net exporter of pesticides to countries such as USA and some European & African countries. Exports formed 39% of total industry turnover in FY07 and have grown at a Compounded Annual Growth Rate (CAGR) of 18% from FY 03 to FY 07.
 
Prior to 2005, i.e. in the process patent regime, Indian companies focused on applied research and concentrated on marketing generic and off-patent products. Due to this, the R&D expense by Indian companies was lower at approximately 1% of turnover. Global companies focused on high-end specialty products and dominated the market for patented new molecules. However, with the onset of the product patent regime in India since 2005, the Indian companies will need to increase R&D expense to meet competition from MNCs. Alternatively Indian companies can be competitive in the area of Contract Research and Manufacturing Services (CRAMS).
 
With the advent of the Integrated Pest Management (IPM) technique, the use of biopesticides and Genetically Modified (GM) seeds has increased. Globally, GM seeds are used mainly for commercial crops like cotton, maize, soyabean and canola. In India, Bt cotton is widely used and the acreage stood at 6.20 mn ha for 2007, a growth of 63% over the previous year. Use of GM seeds may diminish the use of insecticides but the use of herbicides may improve.
 
CARE Research feels that the demand for pesticides can be augmented only through sustainable growth in agriculture. With the government’s focus on development of the agriculture sector, the industry may see a better future. The Indian pesticide industry is also likely to move towards the global product mix, with an increase in the use of herbicides and fungicides. Exports will continue to remain the growth driver.

The report elucidates facts about the Indian Pesticides Industry, supplemented by latest available data. Emphasis is laid on the following topics to accomplish the report:

• The current state of the Indian Pesticide industry with past trends.

• Types of pesticides and rationale for their usage.

• Safety Aspects – human and environment safety due to use of pesticides. Impact of nonjudicious usage and steps to be undertaken for judicious usage.

• Industry features elaborated with respect to seasonality of demand, fragmented structure, low R&D expense and regulatory framework.

• Demand drivers, statewise, categorywise and cropwise pesticides consumed for the period FY 97 to FY 06.

• Import – Export trend with quantitative and price data for the period FY 01 to FY 08.

• Details on marketing strategies adopted by Indian companies, their market share, cost analysis and key products/brands.

• Use of bio-pesticides and Genetically Modified (GM) seeds and its impact on the domestic pesticides industry.

• Data on global pesticides consumption from 2003 to 2007 and of GM seeds from 2002 to 2007.

• A brief overview of five major pesticide companies in India with their three years latest available financial data.

Executive Summary
Chapter 1 Industry Overview
1.1 Rationale for Pesticide Use
1.2 Classification of Pesticides
Chapter 2 Industry Features
2.1 Low/Medium Capital intensive
2.2 Fragmented Industry
2.3 Seasonal demand
2.4 High Working Capital requirement
2.5 R&D - A need
2.6 Increasing Export orientation
2.7 Low Brand Awareness
2.8 Regulatory Framework
Chapter 3 Safety Aspects – Human safety
and Environmental safety
3.1 Impact of non-judicious use of
pesticides
i Pesticides Resistance
ii Pest Resurgence
iii Pesticides Residues
3.2 Steps for Judicious Pesticide usage
3.3 Regulation monitoring safe
usage of pesticides
i Maximum Residual Level (MRL)
ii Restricted Pesticides in India
Chapter 4 Demand Drivers
4.1 Crop Yield
4.2 Area under Agricultural crops &
production in India
4.3 Pest Attack
4.4 Price realization from crops
4.5 Low level of Farmer awareness in
India unlike globally
4.6 Availability of Credit
4.7 Focus on biofuels
Chapter 5 Statistics
5.1 Installed Capacity & Production
5.2 Consumption
i Domestic Consumption
ii Crop-wise Consumption
iii State-wise Consumption
iv Major Insecticide, Fungicide &
Herbicide used on key crops in India
v Global consumption
Chapter 6 Import – Export Trend
6.1 Imports
6.2 Exports
Chapter 7 Cost & Profit Analysis
7.1 Cost Analysis
7.2 Duty Structure
7.3 Pricing
7.4 Profit Analysis
Chapter 8 Competition Analysis
8.1 Domestic
8.2 Key products/brands of major players
8.3 Global
Chapter 9 Analytical model
I Porter’s Five Force Model
II SWOT Analysis
Chapter 10 The Road Ahead
10.1 Integrated Pest Management (IPM)
10.2 Biopesticides
10.3 Genetically Modified (GM) Crops
Chapter 11 Outlook
Chapter 12 Company Scan
A United Phosphorus Ltd. (UPL)
B Rallis India Limited
C Syngenta I Ltd.
D Bayers Cropscience Ltd
E BASF India Ltd.
Chapter 13 Annexures
I Types of Registration
II Insecticides registered u/s 9(3) of the Insecticides Act, 1968
III MRL values of some pesticides on food commodities
IV List of banned pesticides for manufacture, import and use in India
V List of pesticides restricted for use in India
 

List of Figures

Fig 1.1 Input in Agriculture operation
Fig 1.2 Classification of Pesticides
Fig 2.1 Industry Structure
Fig 4.1 Index of International Commodity Prices
Fig 5.1 Production trend from FY98 to FY07
Fig 5.2 Pesticides Consumption Crop wise – 2006
Fig 5.3 Insecticides Consumption Crop wise – 2006
Fig 5.4 Fungicides Consumption Crop wise – 2006
Fig 5.5 Herbicides Consumption Crop wise – 2006
Fig 5.6 Pesticides Market – State wise - 2006
Fig 5.7 State wise Insecticides consumption – 2006
Fig 5.8 State wise Fungicides consumption – 2006
Fig 5.9 State wise Herbicides consumption– 2006
Fig 5.10 Pesticide Usage in India & Globally
Fig 6.1 Export Destination
Fig 7.1 Cost Breakup of key players
Fig 7.2 Operating Profit Margins in FY08
Fig 8.1 Market Share
Fig 10.1 Global GM Seeds Market
Fig I.1 Current Registeration Process
Fig I.2 Proposed Registeration Process

List of Tables:

Table 1.1 Comparison between Chemical and Biopesticides
Table 2.1 Company wise working capital requirement
Table 2.2 R&D expense as a % of sales for Indian Companies
Table 2.3 R&D expense as a % of sales for International Companies
Table 2.4 Comparison of pesticide residues in
food products for India vis-à-vis World
Table 4.1 Crop yield for various countries of the world
Table 4.2 Area under agricultural crops & production in India
Table 4.3 Trends in agricultural production of key crops
Table 4.4 Per hectare pesticide consumption in different countries
Table 5.1 Installed Capacity and Production
Table 5.2 Category wise consumption of pesticides – value wise
Table 5.3 Category wise consumption of pesticides – volume wise
Table 5.4 State wise pesticide consumption
Table 5.5 Major insecticides, fungicides and herbicides used on key crops in India
Table 5.6 Global Pesticide consumption
Table 5.7 Geographical market size
Table 6.1 Imports in quantity terms
Table 6.2 Imports in value terms
Table 6.3 Price per kg of imported pesticides
Table 6.4 Imports Data for FY 07 & FY 08
Table 6.5 List of pesticides imported (top 5)
Table 6.6 Exports in Quantity terms
Table 6.7 Exports in Value terms
Table 6.8 Price per kg of exported pesticides
Table 6.9 List of pesticides exported (top 5)
Table 6.10 Exports Data for FY 07 & FY 08
Table 7.1 Price realization p.u. table (domestic)
Table 8.1 Pesticide sales of leading MNCs for 2005 to 2007
Table 10.1 Domestic adoption of Bt cotton
Table 10.2 Biotech Crops in field trial in India 2007
Table 10.3 Global area under GM crops
Table 10.4 Global area of biotech crops in 2006 & 2007

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