Agrochemical market in India to reach USD 7.02 billion by 2025

Agrochemical Market in India was valued at USD 4.42 billion in 2019 and is estimated to reach USD 4.78 billion by the year 2020.

It is expected to grow at the CAGR of 8% within the time horizon of 2020-2025 because of increasing population growth, declining cultivable land and pest problem in crops.

The market size of these agrochemical products will reach USD 7.02 billion by the end of the year 2025 in India.

Definition / Scope
Market Overview
Market Risks
Top Market Opportunities
Market Trends
Industry Challenges
Technology Trends
Pricing Trends
Regulatory Trends
Market Size and Forecast
Market Outlook
Technology Roadmap
Distribution Chain Analysis
Competitive Factors
Key Market Players
Strategic Conclusion
References
Appendix

Definition / Scope

Agrochemicals are the chemical products used in agriculture to control pests, increase the productivity of the cultivable land and enhance the quality of the food products.

However, the excessive use of these chemicals harms the environment causing a nutritional imbalance in soil and toxic health effects among farmers and other exposed individuals.

It can be insecticides, fungicides, herbicides, bio-pesticides, and others (plant growth regulators, fertilizers, rodenticides, etc). In the context of India, these agrochemical products are used in paddy, cotton, pulses, vegetables and fruit farms.

There are almost 125 technical grade manufacturers, 800 formulators, more than 145,000 distributors.

Market Overview

In the global context, India is the fourth-largest producer of agrochemical products. The market value of the agrochemicals market in India is valued at USD 4.42 billion in 2019. It is expected to grow at the CAGR of 8% within the forecasted time horizon of 2020-2025.

The market value of the agrochemical market in India will reach USD 7.02 billion by the end of the year 2025.

Based on the type of product, the insecticides segment is dominating the agrochemicals market in India, which accounts for almost 55% of the total agrochemical market of India.

The market size of this segment is valued at USD 2.4 billion in 2019 and is expected to reach USD 2.6 billion by the end of the year 2020. As the application of the agrochemicals is considered, the cereals and grains segment is dominating this agrochemical market with the market share of 29% of the total Indian agrochemicals market.

High population growth, declining cultivable land, and increasing pest problems are the major driving factors for the growth and development of the agrochemicals market.

However, the use of genetically modified seeds and under consumption of the agrochemicals in the Indian agricultural field might create the risk for the development of its market.

The key market players engaged in this market are Bayer crop science Ltd, United phosphorus Ltd, Gharda Chemicals Ltd, Rallis India Ltd, etc.

Market Risks

Use of genetically modified seeds

In the context of India, the farmers are using the genetically modified seeds. For instance, more than 90% of the cottonseed sown in the Indian field are genetically modified, which is named as Bt cotton.

These genetically modified seeds have the potentiality of possessing immunity towards natural pests and other environmental threats such as droughts.

Because of this, a limited amount of agrochemicals are required, which creates a significant risk for the growth and development of the agrochemical market.

Top Market Opportunities

High population growth rate

India is the second most populated country globally. The population is growing at a rate of 1.1% and is forecasted to reach 1.38 billion by the end of the year 2020 from 1.366 billion in 2019.

The population is expected to grow at a rate of 0.99% for 2020. Although the population of the country is in the rising trend, the cultivable land remains constant.

It creates the need to increase the per hectare production of crops. So, the rising population is creating the demand for the efficient utilization of the agricultural products for the enhancement of the productivity of the arable land.

Agriculture as a major employment sector

In the context of India, agriculture is the major employment sector that employees almost half of the Indian workforce. Here, almost 70% of the Indian people residing in rural areas are dependent on agriculture for their livelihood. It contributes to almost 17% of the national GDP of India.

High dependency of the people in the agricultural sector will create a significant opportunity for the growth and development of the agrochemical market.

Market Trends

Declining cultivable land

India accounts for almost 16% of the world’s population but it accounts for less than 2% of the total landmass. Along with this, the cultivated land accounts for just 190 million hectares and is declining at the rate of 0.03 million hectares per year, While the population is growing at the rate of 1.1% annually.

Because of this, the productivity of the available land should be increased to fulfil the increasing demand of the food grains from the rising population.

To enhance productivity, the demand for agrochemicals will increase. This increasing demand for agrochemicals product is driving the growth and development of the market of these agrochemicals products.

Pest problem on crops

In the context of India, more than 40,000 species of insects are recorded, in which almost about 1,000 insects are considered as the pest responsible for the destruction of the economical crops. The hot and humid climate of India is also favoring the growth of pests in agricultural land.

Almost 20-25% of agricultural food products are destroyed by pests and diseases. The prevalence of pests and diseases among crops is driving the market for the growth and development of the agrochemical market in India.

Lagging in agrochemical consumption

Although India is ranked in the second position in terms of the production of the agrochemical products, it is quite lagging in terms of the consumption of these products globally.

It holds the 13th position in terms of the use of pesticides. Almost 52, 750 tons of the pesticides are used every year. On average, it accounts for almost 0.3 kg per hectare of cropland.

While the use of the fertilizer is 165.85 kg per hectare of arable land. The average amount of the utilization of the overall agrochemicals in India is about 0.65 kg per hectare of the land. This level of low consumption might restrain the growth and development of the agrochemicals market in India.

Governmental support for organic farming

The government of India has developed and implemented programs for the promotion of integrated pest management and the usage of bio-pesticides. For instance, Karnataka, one of the cities of India, has already adopted organic farming and has reduced the use of the chemicals in the agricultural field.

Along with this, the government has also encouraged the zero budget natural farming to improve the income of the farmer. It might restrain the growth of the agrochemicals market.

Industry Challenges

High research and development costs

In the context of India, the cost required for the development of new agricultural products is quite high. On average, more than USD 180 million is required to develop the new agrochemical molecule.

Along with this, it takes about nine years to complete the research and development of the new agrochemical products. So, this is quite challenging for small firms for the development of the new agrochemical products in the context of India.

Technology Trends

Advancement in science and technologies is creating a favorable environment for the research and development of agrochemical products. Some of the new technological changes in agrochemical market are discussed as follows:

Spray drift reduction technology: These technologies are based on low-drift nozzles and drift-reduction agents which reduces the number of agrochemicals spraying on land and effect on terrestrial and aquatic organisms.

Electrostatically charged sprays: This technology uses electrical charges to control the droplet trajectories to increase the deposition and reduce downwind drift.

Closed spraying system: This system reduces the chances of the contamination caused by agrochemicals to the operators and farmers as the spraying and mixing equipment is closed.

Biopesticides and biostimulants: It encompasses the natural products instead of synthetic chemical, which includes the plant extracts, and organic acids.

Pricing Trends

The price of the agrochemical products depends upon the type of product, the quantity of product, the form of product, product composition, and brand name of the product. The price of imidacloprid insecticide is USD 15.07 for 1 liter while the cost of copper oxychloride 50% is USD 32.8 for 5 kg.

The price of aliette systemic fungicide ranges from USD 3.8 to USD 31.49 for 1 kg. The price of Dynofop herbicide powder is about USD 3.28 per packet while the price of metribuzin 70% WP is USD 14.43 per kg. The price of metsulfuron methyl is about 0.028 per gram. On average, the price of insecticides is USD 4.13 per packet.

The price of the agrochemicals (fungicides, Insecticides, herbicides) is expected to increase by one- fifth of the product price.

Regulatory Trends

The Ministry of Agriculture and the Department of Agriculture and Cooperation is responsible for the regulation of the agrochemical market in India. Some of the key regulatory trends of the agrochemicals market are discussed as follows:

Insecticides Act: It provides the guidelines for manufacture, sale, transport, export, and import of pesticides. According to it, the registration must be obtained before the production and import of the agrochemical products and licensing is required for the manufacture, formulation, and sale of these products.

Pesticides Management Bill: It was developed in the year 2017 replacing all the acts related to the agrochemicals, which were enacted previously. It regulates the manufacture, import, export, storage, transport, distribution, and sale of pesticides. It is also responsible for the regulation of the quality and use of pesticides.

Market Size and Forecast

The total market value of the agrochemicals market in India is valued at USD 4.42 billion in 2019. It is expected to grow at the CAGR of 8% within the forecasted time horizon of 2020-2025.

The market value of the agrochemical market in India will reach USD 7.02 billion by the end of the year 2025 because of high population growth, declining cultivable land and increasing pest problem

Based on the product type

The insecticides segment is dominating the agrochemicals market in India. This segment accounts for almost 55% of the total agrochemical market in India. The market size of this segment is valued at USD 2.4 billion in 2019 and is expected to reach USD 2.6 billion by the end of the year 2020.
The fungicides segment accounts for almost 18% of the total market value of the agrochemical market in India. Its market size is valued at USD 0.79 billion in 2019 and is expected to reach USD 0.86 billion by the end of the year 2020.
The herbicides segment accounts for almost 16% of the total market value of the agrochemical market in India. Its market size is valued at USD 0.70 billion in 2019 and is expected to reach USD 0.76 billion by the end of the year 2020.
Other agrochemicals such as plant growth regulators, fertilizer, rodenticides, etc hold the remaining market share of the agrochemical market in India.

Based on application

The cereals and grains segment is dominating this agrochemical market with a market share of 29% of the total Indian agrochemicals market. Its market size is valued at USD 1.3 billion in 2019 and is expected to reach 1.4 billion by the end of the year 2025.
The vegetables and fruits segment accounts for 17.64% of the total Indian agrochemical market. The market size of this segment is valued at USD 0.78 billion in 2019 and will reach USD 0.84 billion by the end of the year 2025.
The oilseed and pulses segment holds almost 23.52% of the total agrochemical market in India. Its market size was valued at USD 1.04 billion in 2019 and is estimated to reach USD 1.12 billion by the year 2025.

Market Outlook

The agrochemical market in India is expected to grow at the CAGR of 8% within the forecasted period of 2020-2025 because of the high population growth, declining cultivable land and existing pest problem in crops. It will reach USD 7.02 billion by the year 2025.

Technology Roadmap

The technological changes such as the introduction of the advanced spray nozzles, novel synthetic chemicals, closed spraying systems occurring in this agrochemical market are driving the growth and development of the agrochemical market.

Along with this, the focus of the consumers and Indian government towards the use of organic and natural ingredients such as plant extracts are also driving the market towards the production and use of the biochemical and biostimulants.

Distribution Chain Analysis

The key stakeholders involved in the operation of this market are product manufacturers, formulators, distributors, and sales by retailers and wholesalers. At first, the manufacturers are responsible for the manufacture of the high purity chemicals in the bulk amount and sell them to the formulators.

Then the formulators add carrier, solvents, deodorants, and other necessary chemicals for the formulation of agrochemicals.

Once the formulations are packed, they are ready for the sale and are consumed by the farmers for the increasing agricultural yield and protecting against pests.

Competitive Factors

The key market players engaged in this Indian agrochemical market are competing to aware of the farmers about the efficient use of agrochemicals to increase the productivity of the agricultural field.

Along with this, they are focused on the development of environmentally friendly agrochemicals to address the environmental and health issues caused by the use of synthetic chemicals.

Key Market Players

Short profile of the key market players engaged in agrochemical market are discussed as follows:

Bayer crop science Ltd: It is the global company engaged in the sector of agriculture and life sciences. It is established in India since 1896 delivering innovative products and services for crop protection, bio-agriculture, and pest control.

United Phosphorus Ltd: It is a multinational company with its headquarter in Mumbai, Maharashtra. It manufactures agrochemicals, industrial chemicals, and specialty chemicals. It is engaged in both agro and non-agro activities.

Syngenta India Ltd: It is engaged in the production of plant breeding, crop protection agrochemicals and provides solutions for seed care. It also provides technological solutions to solve the challenges of the farmers. Its headquarter is based in Pune, India.

Rallis India Ltd: It is one of the leading companies of the agrochemicals engaged as the subsidiary of Tata chemicals in India. It has almost 2,300 distributors in more than 80% districts of India.

Gharda Chemicals Ltd: It is engaged in the development of innovative agrochemical products and polymer. It also provides appropriate processes and services in the agrochemical sector.

BASF India Ltd: It is the global company engaged in the sector of chemicals, materials, industrial solutions, surface technologies, nutrition and agricultural solutions. The revenue of this company is valued at USD 59 billion in 2019.

Dhanuka: It is one of the leading agrochemical companies in India with almost 7,200 distributors and 75,000 dealers. It has three manufacturing units in Rajasthan, Gujarat and J & K.

Dow Agroscience: It is a non-governmental company engaged in agriculture and allied business activities for the last 26 years with its headquarter in Mumbai, India.

Strategic Conclusion

The agrochemicals market is growing at the rate of 8% because of the increasing population growth, declining cultivable land and pest problem in agricultural fields.

However, the under consumption of the agrochemicals by Indian farmers, the use of genetically modified seeds and organic pesticides might restrain the growth of its market.

So, the market players engaged in the agrochemical market should be focused on the manufacture of organic chemicals and biopesticides.

References

Appendix

GDP= Gross domestic product
USD= United States Dollar
CAGR= Compound Annual Growth Rate