The agrochemical exports have recorded a significant growth in recent times and could exceed Rs 80,000 crore in the next four years, according to a knowledge paper by AFCI-EY titled Indian Agrochemical Industry: The Story, the challenges, the aspirations, released at the 7th AGM of Agro Chem Federation of India (ACFI) on Tuesday. 

“The USP of India agrochemical industry is their quality and affordable prices which makes their products as the first choice of millions of farmers across 130 nations. If facilitated a conducive environment, the sector shows the potential of achieving exports of over Rs 80,000 crore in the next four years,” the knowledge paper stated. 

Industry leaders said that for exports to grow, the government must focus on facilitating a conducive environment which includes streamlining licencing norms and improving infrastructure for storage and sale, incentivise biopesticide production, streamline registration process for new molecules, enter trade agreements with countries with more relaxed MRL norms, introduce PLI-like scheme to attract investment from global players and reduce GST from 18% to 5%. 

The paper further highlighted that the introduction of PLI incentives for agrochemicals can boost investment of around Rs 10,000 to Rs 15,000 crore in the next 5 years. 

Speaking at the panel discussion, Parikshit Mundhra, Chairman, ACFI said, “The reliance on generic molecules, low agrochemical usage, the complex registration process for new molecules and heavy dependence on imports are some of the challenges that must be transformed into opportunities through the “Make in India” initiatives.” 

Given its role in enhancing agricultural productivity and export potential, the agrochemical industry will play a vital role in India’s quest of becoming a global manufacturing hub ultimately resulting in US$ 5 trillion economy by 2025, Mundhra added. 

The agriculture sector has been growing at 3.8-4% CAGR and to meet this objective, the agriculture and allied sectors need to grow at a compound annual growth rate (CAGR) of 9.3%. 

In the panel discussion titled “Make in India: Transforming challenges into opportunities in the Agrochemical Industry”, Parikshith Jhaver, Founder & Promoter, Tagros Chemicals; Rajesh Aggarwal, MD, Insecticides India Limited; Parikshit Mundhra, Chairman, ACFI; Ankur Agarwal, MD, Crystal Crop Protection Ltd.; Aashish Kasad, Sr. Partner, EY and Maulik Mehta, CEO, Deepak Nitrite Ltd. reiterated that the "Make in India" initiative has the potential to transform India's agrochemical industry into a global manufacturing and export powerhouse. 

Speakers highlighted the below challenges of Indian agrochemical industry

Reliance on Generic Molecules: India's agrochemical usage is dominated by generic molecules, many of which have been in use for decades. The high cost and complexity of research and development (R&D) and registration processes deter the introduction of new, more effective molecules. This dependency on outdated solutions hampers the industry's growth and the ability of Indian agriculture to meet global standards.

Low Agrochemical Usage: Compared to global standards, India’s per-hectare usage of agrochemicals is low. The prevalence of generic molecules, which are bulkier and less efficient, exacerbates this issue, leading to suboptimal crop protection and lower agricultural productivity.

Regulatory Framework: The current regulatory environment, governed by the Insecticides Act of 1968 and the Insecticide Rules of 1971, is often seen as a hindrance rather than an enabler. The registration process for new molecules is particularly complex, time-consuming, and costly, limiting innovation and the introduction of advanced agrochemical products.

Import Dependence: The Indian agrochemical industry heavily relies on imports for raw materials and technical intermediates. This dependence makes the industry vulnerable to international market fluctuations and geopolitical tensions, as seen during the COVID-19 pandemic.

To turn these challenges into growth opportunities, the moderator of the session Ankur Aggarwal said "Make in India initiative must focus on three key growth levers: improving trade and marketing of agrochemicals, increasing domestic production and R&D, and creating a favourable policy environment”.

Regarding Enhancing Trade and Marketing, Rajesh Aggarwal, opined that “The Indian market for agrochemicals is growing, driven by the commercialization of agriculture, increasing cultivation of high-value crops, and greater farm mechanization. Streamlining the process of obtaining licenses for storage and sale across states and improving infrastructure can boost domestic trade. To enhance exports, simplifying export registration and compliance processes is crucial. India could explore the manufacturing of certain banned or unapproved molecules for export markets and enter into strategic trade agreements with major importing countries”.

Speakers emphasized on Consumer Awareness. They feel that the Awareness among farmers regarding the selection and correct usage of agrochemicals is crucial. Industry players should enhance their extension services, while the government could leverage Krishi Vigyan Kendras (KVKs) to disseminate advanced agronomic knowledge.

Jhaver talked about logistics infrastructure as it costs almost 4 times higher in India. He said that 'In the age of shorter product lifecycles & uncertainties, an addition of a product in the PCB/ EC needs to be approved by the centre today, which should be allowed by the state PCB itself. Such changes will help companies to focus on growth and innovation'.

On the subject of boosting domestic production and R&D, Maulik Mehta feels that by creating a more favourable policy environment, similar to the Production Linked Incentives (PLI) Scheme in the pharmaceutical sector, India can attract investments from global players.

Mehta also said that R&D in the agrochemical sector requires significant investment and time. The government can foster R&D through public-private partnerships (PPPs), sourcing superior technologies from global leaders, and enhancing public sector research. Encouraging pooled investments from private players could also help in overcoming the financial barriers associated with R&D.

Speakers also felt that the Small and regional agrochemical manufacturers often lack the resources for R&D and rely on trading generic products. Special provisions, such as subsidies, rebates, and incentives for biofertilizer and biopesticide production, can help these players thrive.

They demanded that simplified export registration process and strategic trade agreements will help exports. Adoption of technology in to ensure efficient use of agrochemicals, awareness among farmers, PLI-like scheme for global players and foster R&D through PPP will boost domestic production. 

On the policy front, the Federation opined that registration process for new agrochemical molecule must be streamlined, small and regional players must be incentivised, enter trade agreements with countries with more relaxed MRL (maximum residue limit) norms and incentives for capacity building and export-oriented manufacturing, could make India an attractive destination for global agrochemical companies. 

Setting the tone for the panel discussion, Dr Kalyan Goswami, Director General, ACFI, said: “India's agrochemical industry plays a pivotal role in its agricultural success, supporting increased crop yields and safeguarding food security. As the fourth-largest producer of agrochemicals globally, India faces a paradox: while it holds significant production capacity, it still imports significant worth of agrochemicals, primarily from China. The "Make in India" initiative provides a timely framework to transform these challenges into opportunities, enabling India to become a global manufacturing and export hub for agrochemicals.” 

The ACFI also demanded that the government in the 54th GST council meeting scheduled for next week reduce the GST on agrochemicals from the existing 18% to 5%. This will help the domestic and global manufacturers to contribute in India’s agricultural production and productivity thereby also ensuring farmers’ well-being and security.

In the concluding remarks, Abhijit Bose, General Secretary, ACFI said that “The "Make in India" initiative has the potential to transform India's agrochemical industry into a global manufacturing and export powerhouse. By addressing the challenges of reliance on generic molecules, low usage of agrochemicals, and a complex regulatory framework, India can capitalize on the opportunities presented by global market shifts and domestic demand growth.

He also said that “Through strategic improvements in trade, marketing, production, R&D, and policy reform, India can position itself as a leader in the global agrochemical industry. This transformation will not only contribute to achieving the goal of a US$ 5 trillion economy but will also ensure sustainable agricultural growth, improved food security, and enhanced livelihoods for millions of farmers across the country”.