Indian agchem market to grow at 12-13% to $ 6.8 bn by FY17

The pesticides industry in India is expected to grow at 12-13 percent a year to touch Rs 39,000 crore by 2016-17, a Tata Strategic Management Group recently said.

"Indian crop protection market was estimated at USD 3.8 billion in fiscal 2011-12 with exports constituting 50 per cent of the market. The market is expected to grow further at 12-13 percent to reach USD 6.8 billion," Tata Strategic Management Group and FICCI said in a report on agrochemicals.

The report was presented at Third National Agrochemicals Conclave 2013 here.

"This report focuses on agro-chemicals and highlights the future trends with focus on opportunities and challenges along with strategic imperatives for the industry players," Tata Strategic Management Group CEO Raju Bhinge said.

The industry has shown an inclination towards adoption of Integrated Pest Management (IPM) approaches and use of biopesticides. Biopesticides currently represent only 4.2% of the overall pesticide market in India and are expected to grow at ~10% annually in the coming years.

The Indian crop protection market is supported by strong drivers of growth, the report said.

"Current low consumption of crop protection products in India is 0.6 kg/hectare against world average of 3 kg/hectare, offers immense opportunities for future growth," said Manish Panchal Practice Head Chemicals at Tata Strategic Management.

He added that to gain market share product availability and speed to market would be key to success.

The report stated that despite strong growth drivers, agro-chemicals industry faces challenges in terms of low awareness among farmers, wide geographic spread of end users, managing availability and distribution cost.

Apart from this, leading industry players believe that the rising sales of spurious pesticides and spiked bio-pesticides pose a major threat to industry growth.

Manish Panchal, Practice Head of Chemicals added “Current low consumption of crop protection products in India, 0.6 kg/ha compared to world average of 3 kg/ha, offers immense opportunities for future growth. To gain market share, product availability and speed to market would be key to success. To achieve this, companies need to relook at their SCM strategies”.

The Special Feature as part of the report, titled - Strategic Supply Chain Management for Agrochemical Companies, raises vital questions about the effectiveness of current SCM practices in agrochemicals and uncovers innovative ways and new practices from within the industry adopted by a select set of more nimble, progressive companies who are setting new benchmarks in supply chain performance.

Tata Strategic Management Group recommends simplified registration norms for pesticides exports and increase scope of regulation to include all types of pesticides (including biopesticides).

Regulators should increase their inspection staff to ensure regular checks to contain the growth of spurious products. There is also a need to encourage R&D and ease registration process for development of new molecules.

Large MNCs can look at strategic alliances with Indian counterparts to increase their marketing and distribution presence. Smaller Indian companies can look at tie-ups with MNCs to explore opportunities in contract research and manufacturing.

Key highlights of the Agrochemicals 2013 report:

1.Indian crop protection market estimated at USD 3.8 Bn in FY12 with exports constituting 50% of the market and expected to reach ~USD 6.8 Bn by FY17

2.Current low consumption of pesticides in India, 0.6 kg/ha compared to world average of 3 kg/ha offers significant opportunity for growth.

3. Biopesticides, which currently account for 4.2% of the market are expected to grow at ~10% p.a.

4. Industry to face challenge from the high sale of spurious/ spiked products

5. Large availability of technically skilled labour and patent expires in near future to stimulate the contract manufacturing and research in agrochemicals

6. Strategic alliances and M&As to be the trend in near future

7. Regulations need to be simplified and its scope should include all types of pesticides (including biopesticides)

8.Effective Supply Chain management to become a key success factors for the industry players