Agrochemical Industry Forecasted to Cross $1.7 Billion by this Year

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agrochemicalIndia, traditionally being an agrarian country, agriculture and the allied activities has always been giving significant contribution to the Indian economy. In spite of being a developing country, the favorable conditions like climate, land, variety in soil, etc. have always encouraged agriculture in India. In India, with the growing population, there is fast increase in the demand for food. On the other hand, the demand for new dwelling has reduced cultivable land available for agriculture. India has to ensure food security for population of 1.21 billion. The country has to get huge produce so as to satisfy such large population. Market Basket Analysis

Having huge produce also has a risk of being damaged and getting spoilt in many ways like by pests, insects, fungi, other microbes, etc. In order to prevent this many chemicals are sprayed on the crops. Agrochemicals are the various chemical products used in the agriculture. They may be broadly classified into pesticides, insecticides, herbicides and fungicides. Also synthetic fertilizers, hormones and other chemical growth agents along with concentrated stores of raw animal manure can be called as agrochemicals.

Like agriculture, the agrochemicals industry is also a significant industry for the Indian Economy. India stands out to be the fourth largest producer of agrochemicals globally, following United States, Japan and China. In India, the maximum share of pesticide consumption is accounted for by paddy, around 28%, followed by cotton of around 20%.

The various kinds of Agro chemicals in India are Fungicides, Herbicides, Bio-pesticides, Nematocides, Rodenticides and Fumigants. India’s agrochemicals market has a huge growth potential for foreign investments. Also the MNCs operating in the sector can witness five to ten times further annual growth in India as compared to that in other countries thus making India a global hub for agrochemicals.

The Indian Agrochemicals Industry is anticipated to grow at 7.5%, to reach over $1.7 billion by 2012. The reason for this growth and increased usage of agrochemicals in India is the growing awareness about the affirmative impact and benefits of agrochemicals on the agri-produce and the need for crop protection and growth increasing the use of chemicals among farmers, deficiency of farm labour, growth in organized retail segment and flourishing domestic horticulture and floriculture industries. The use of agrochemicals is unavoidable to increase farm production in India. Also the growth in demand for food grains, limited farmland availability, growing exports, and increasing awareness about the use of agrochemicals are all the drivers for growth in the Indian agrochemical industry. In addition, a significant reason behind growth of agrochemicals is the lower availability of natural fuels, as the use of the same can help boost agri-production.

Besides these, High R&D costs, Threat from Genetically Modified (GM) seeds, Need for efficient distribution systems, Support for Integrated Pest Management (IPM) & rising demand for organic Farming, Counterfeit Products are some of the challenges faced by the booming Indian agrochemical industry.

The Indian agrochemicals market is highly uneven in character with more than 800 Formulators. There is severe competition with big number of organized sector players and significant share of forged pesticides. The market has been observing, mergers and acquisitions whereby the large players buy out small manufacturers.

The growing concerns about the agriculture and allied industries have led the manufacturers to focus on developing environmentally safe pesticides by the industry as well as the Government. Larger companies focus on brand building by conducting awareness camps for farmers and offering complete solutions. Also there is increase in strategic alliances among huge players for superior market reach and acquisitions of smaller companies globally to expand product portfolio.

So it can be concluded that, as and because the agriculture industry remains significant in the Indian economy, the Agrochemical industry will continue to grow. The said industry is also turning out to prove as a promising field for the growth of the Indian economy.