Have we really reduced our import dependency on China for Agrochemicals or is it just an intent so far?
Oct. 6, 2020
By Saumendra Nayak
► About 9 Lakh MT of Agrochemicals are produced annually out of which almost 50% are exported.
► Total Export from India stood at INR 23720 Cr in FY 20. Not every export of Agrochemicals from India is manufactured in India. Some of them are formulated in India from the Technicals imported whereas few of them are even imported as ready formulation to be exported again to other countries.
► If we talk about the import of Agrochemicals into India, we can say that the total value stood at INR 9096 Cr in FY 20 which included Technicals, finished Formulations and Formulations at N-1 stage. These are used for domestic consumption as well as Exports.
After Covid 19 occurred, it was anticipated that since Covid19 first initiated in China, and India depends on China for its import upto 50% in terms of total value of Agrochemicals, the import would go down and that too specially from China due to Lockdown in China followed by lockdown in India. But it happened the other way round. Let’s talk in terms of numbers which would reveal the total stats. India’s Total Import stands at INR 4577 Bn in Q1 FY 21 Vs INR 33609 Bn in FY 20 which is just 14%. But there is a different story about Pesticides. The Pesticide import in FY 20 was ₹ 9096 Cr whereas in FY 21 Q1 (Apr-June) it is INR 4230 which is almost 47% of last year’s total import. This indicates panic buying to a great extent to secure the supply of Raw materials for manufacturing even at a higher cost of inventory.
China as a supplier has a Lion's share of almost 50% of India's total import of Agrochemicals
► Now let’s talk about the import of Technical Vs Formulations. In FY 20 the ratio of Tech to formulation was 74:26 which widened to 82:18 in Q1 FY21.
► When we talk about the dependency on China, in FY 20 the total import from China for Agrochemicals stood at ₹ 4467 Cr (~49% of total imports of AgChem) which went up by 4% in Q1 FY 21 to reach a value of ₹ 2239 Cr (~53%). This really shows that inspite of so much growing sentiment on making India self-reliant and self dependent in terms of manufacturing, still there has been no reduction in the import of Agrochemicals from China. Even the growing ratio of Technical Vs Formulations hints at a scenario where India is trying to formulate by importing more technical and store it for a longer duration because of uncertainty due to Covid -19.
► There has been a lot of emphasis on building up India as a manufacturing hub for Agrochemicals. Whether be it “Start-up India” or “Atmanirbhar Bharat”, the sentiment has always been there to help India emerge as a global manufacturer and exporter of Crop Protection Agrochemicals.
► According to a TOI report, Government of India is planning for a production linked incentive scheme to boost local manufacturing of some of the key chemicals including the list of 75 identified critical chemicals that are used in manufacturing of Pesticides, Pharmaceuticals and other industrial usages. The incentive includes offering of 10% of production value which will have an outlay of Rs 25000 Cr over the next 5 Years.
► PI industries foraying into manufacturing of intermediates for Pharmaceutical drugs like 'Flavivir' and Dhanuka Agritech expanding its capacity for Technical manufacturing are just few of the examples set by some of the leading Agrochemicals manufacturers which are definitely the steps taken in the right direction at the right time. It may take a couple of years to commission new manufacturing plants by many other manufacturers but the process has definitely kicked off.
Export from India is valued at INR 5290 Cr in Q1 FY21 (~22% of total export of ₹23720 Cr in FY20) . That doesn't mean that the export had declined because major export from India happen from Oct-Jan which is still looking bright due to the process of unlocking and activity resuming to the new normalcy.
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