Agrichemical industry in india overview, scope & challenges

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“Indian Agrichemical Industry:
Drivers, Challenges and
Growth Imperatives”
Submitted To:
APSM-7,
Indian Institute of Management Calcutta (IIMC)
KOLKATA
Submitted By:
Mr. Dinesh Reddy
S14MMMMM01317
THANE

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Table of Content
Contents Page No.
1 Executive Summary 2
2 Global Agriculture & Food Scenario
a. Rising Population, limited land will continue to reduce per
capita arable land
b. World is Urbanizing
c. Growth in world demand for Grains and Oil seeds
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3 Indian Agriculture & Food Scenario 4
4 Introduction to Indian Agrichemical Industry
a. Classification of Crop Protection chemicals
b. Domestic consumption: scope of the Agrochemical industry
c. Industry Structure and Competitive landscape
d. Distribution and Sales Channel
e. Key Industry players in India
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5 Growth opportunities and Drivers for Indian Agrochemical Industry 9
6 Indian Agrochemical Industry Analysis: Porters 5 forces 12
7 SWOT Analysis of an Indian Agrochemical Industry 14
8 Emerging Trends in Agrochemical Industry 15
9 Challenges faced by Indian agrochemical industry 16
10 Complexity in rural marketing 17
11 Critical success factors for companies to sustain in the agrochemical industry 17
12 The Way Ahead 19
13 References 20

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EXECUTIVE SUMMARY
Increasing demand of food grains & declining farmlands in India have increased
pressure on farm yield improvement and reduction in crop losses due to pest attacks.
Indian crop protection market was estimated at $ 3.8 billion in FY12 with exports
constituting about 50% of the market. The crop protection market has experienced
strong growth in the past and is expected to grow further at approximate 12% p.a. to
reach $ 6.8 billion by FY17.
This paper assesses the growth potential of the Agrochemical industry,
understand the challenges faced by the companies, growth imperatives, critical
success factors and emerging trends in this industry.
Efforts have been put to assess the industry attractiveness by using the Porter’s
5 forces analysis tool and also to understand the internal and external parameters
that can influence on this industry through SWOT analysis.
This analysis can be of use for strategic marketers to maneuver a company’s
future growth plan in a very structured manner, taking into cognizance of the industry
changing trends and understanding the complexity of rural marketing in India.

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1. GLOBAL AGRICULTURE & FOOD SCENARIO:
World Population to rise to over 9 billion, faster in ‘less developed’ countries
Global population got doubled from 3 Billion to 6 Billion between 1960 and 2000, and global
agricultural production rose by 150%. Agricultural production has risen steadily since 1961 due to the
advancement in technology and related factors (e.g. investment, education, institutions and improved
farm management). Even then 1 Billion people remain hungry every day.
1.1. Rising Population, limited land will continue to reduce per capita arable land
In 1960, world had 3 billion people and had 4.3 ha arable land per person which estimated to shrink to
1.8 ha per person by 2020.
1.2. World is Urbanizing
In 1950, rural population was 2.5X of urban population. Whereas in 2010, both are almost equal. By
2050, urban populations will be2.3X of rural population. As world urbanizes, it reduces agricultural
work force available in rural areas. In developed economies of Europe and America, agricultural work

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force represents only 5% of the total work force while estimates Africa and Asia suggests that from
70% in 1980s, it will decline to 50% by 2015.
1.3. Growth in world demand for Grains and Oil seeds
Demand for grains and oil seeds come not just from food but also from feed and fuel. With every
passing decade, demand is rising faster than previous one in CAGR terms.
2. INDIAN AGRICULTURE & FOOD SCENARIO:
The Indian population, which increased from 683 million to 1210 million in 2010, is estimated to reach
1475 million by 2030. To feed the projected population of 1.48 billion by 2030, India need to produce
355 million tonnes of food grains. The expanded food needs of future must be met through intensive
agriculture without much expansion in the arable land. The per capita arable land decreased from 0.34
ha in 1950-51 to 0.15 ha in 2000-01 and is expected to shrink further to 0.07 ha in 2030.

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India is likely to witness massive shortages in pulses, edible oil and sugars by 2021 and 2026.
3. INTRODUCTION TO INDIAN AGRICHEMICAL INDUSTRY:
India is the fourth largest producer of agrochemicals globally, after United States, Japan and China. The Indian
crop protection industry is estimated to be USD 4.1 billion in FY13 and is expected to grow ar a CAGR of 12% to
reach USD 7.1 billion by FY18. The exports currently constitute almost 50% of the Indian crop protection industry
and are expected to grow at a CAGR of 16% to reach USD 4.2 billion by FY18, resulting in 60% share in Indian
crop protection industry. Domestic market on the other hand would however grow at 8% CAGR, as it is
predominantly monsoon dependent, to reach USD 2.9 billion by FY18. The crop protection companies in India

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can be categorized into three types- Multi-National, Indian and Public sector companies and small sector
companies.
3.1. The Crop protection chemicals can be broadly classified into 5 types:
1. Insecticides: Chemicals that provide protection to crops from the insects by either killing them or by
preventing their attack. They help in controlling the pest population below the desired threshold level
and thereby protection the yield.
2. Fungicides: India being a tropical country with high humidity, crops grown here are prone to get infected
with lot of fungal attacks. Fungicides are the chemicals that protect the crop from these fungal attacks
and keep it protected and results in quality output.
3. Herbicides: Herbs are the undesired plants in the field. A paddy plant can be a weed in a wheat crop.
Herbicides are the chemicals that help farmers to maintain their crop clean and tidy without the weeds.
4. Bio-Pesticides: Bio-pesticides are new age crop protection products manufactured from natural
substances like plants, animals, bacteria and certain minerals. They are eco-friendly, easy to use, require
lower dosage amounts for the same performance as compared to chemical based pesticides.
5. Others (Fumigants, Rodenticides, Plant growth regulators, etc): Fumigants and rodenticides are the
chemicals which protect the crops from pest attacks during crop storage. Plant growth regulators help in
controlling or modifying the plant growth process.
The Indian crop protection industry is dominated by the insecticides which form almost 60% of the domestic
crop protection market. The major applications are found in rice, cotton, Chilli and horticultural crops.
Fungicides and herbicides are the largest growing segments accounting for 18% and 16% respectively of the
total crop protection chemicals market. Increasing labor costs and shortage are the key growth drivers for the
herbicides. Biological pesticides, although constitute for only 3% of the Indian crop protection market, they

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provide significant growth opportunities due to increasing concern of safety and toxicity of pesticides, stringent
regulations and government support.
3.2. Domestic consumption: scope of the Agrochemical industry
The per capita consumption of crop protection products in India is amongst the lowest in the world. Currently
the per capita consumption of pesticides stands at 0.6 kg/ha as compared to 5 kg/ha in UK and 7 kg/ha in USA, It
is 50 times lower to other Asian countries. Low purchasing power of farmers, lack of awareness and low
accessibility are some of the reasons for the low consumption in India, thus offering tremendous opportunity for
growth in crop protection industry in India.
3.3. Industry Structure and Competitive landscape
The Indian crop protection industry is dominated by the generic products with more than 80% of the non-
patented molecules. This results in very low entry barriers for the industry. Strong distribution network,
appropriate pricing, brand recall promotions and dealer margin offerings are the prominent critical success

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factors for the companies in this industry. Technical grade manufacturers, formulators producing the end user
products, distributors and end consumers constitute the Indian crop protection market. According to Pesticide
monitoring unit, GOI, there are about 125 tech grade manufacturers that includes 10 multinationals, more than
800 formulators and over 145,000 distribution channel in India. More than 60 tech grade pesticides are being
manufactured indigenously.
Tech grade manufacturers sell high purity chemicals in bulk (usually in 200-250 kg drums) to formulators. These
formulators after adding inert carriers, solvents, surfactants, etc. prepare the formulations, are then packed for
retail sale, supplied to the distributors and finally sold to the end consumers (farmers).
With over 800 formulators the Indian crop protection market is a highly fragmented market. The market has
seen a number of M&As with large players buying out small manufacturers. Companies are looking for strategic
alliances and partnership in order to expand their market reach. Top 10 companies control almost 70-75% of the
market share, primarily depends on their strong brands in product portfolio and also on their capability to
introduce new molecules.
3.4. Distribution and Sales Channel:
The sales of crop protection chemicals are predominantly in rural areas. Therefore large manufacturers with all
India presence use a three-tier sales and distribution network comprising distributors, wholesalers and retailers
for wider market reach.
Companies with pan India distribution have 400-1000 distributors supplying to around 25,000 retailers. Large
multinationals also go with co-marketing and co-distribution with other Indian companies to enhance their
market reach. Companies perform demonstrations to create awareness on the product usage and conduct lot of
word of mouth publicity promotional activities to promote their products.

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3.5. Key Industry players in India
4. GROWTH OPPORTUNITIES AND DRIVERS FOR INDIAN AGROCHEMICAL INDUSTRY:
Export opportunities:
The export of pesticides from India has seen a strong growth over the last few years. India’s capability in low
cost manufacturing, availability of technically trained manpower, seasonal domestic demand, overcapacity
(production capacity of 150,000 MT against production of 85,000 MT IN fy13), better price realization globally
and strong presence in generic pesticide manufacturing (India has process technologies for more than 60 generic
molecules) are the reasons for growing exports of crop protection chemicals from India. Globally, India holds
13th
position in pesticide exports. Most of them are off-patent molecules.
Growing off-patent molecules offering growth in generic market:
About USD 6.3 billion worth molecules to go off-patent from 2013-20 which is offering huge opportunity for
Indian generic manufacturers to expand their market presence.
Agrochemicals going off-patent, 2014-20 (USD billion)

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Integrated Crop Solutions (end to end solutions to farmers):
Companies are looking to provide end to end solutions to the farmers right from the land preparation, nursery
rising, crop protection consultation and harvest solutions, right through suggesting them on the output market
assistance. For ex. Rallis India supports 2.5 lakh pulses farmers on best farming practices and techniques in
Maharashtra and Tamil Nadu, which has helped them to increase their yield by about 15-20%. In the same way
Syngenta India, under its program of providing Integrated Crop solutions to Rice farmers, they provide farmers
an easy and cost-effective transplantation measure and along with that crop protection solutions by their skilled
field force. By doing so, they claim an increase in the Rice output by 5-10% and a reduction in labor costs. With
strategies like these, companies are establishing a loyalty at the end consumer level and rather just surviving the
generic market competition.
Growth in Herbicides and Fungicide:
Herbicide market is expected to grow by CAGR of 15% per year till 2018 to become USD 0.6 billion from USD 0.3
billion in 2013. The primary reason is the labor shortage and cost of deploying labor for the weed control. The
GM technology on developing herbicide tolerant verities offer a lot of growth potential for herbicide market.
Rising food grains demand Vs Diminishing cultivable agricultural land: India has 16% of the world population and
less than 2% of the total land mass. India has almost 190 million hectares of gross cultivated land and there are
limited options of bringing new areas under cultivation. Rapidly growing urbanization is also reducing the land
availability for cultivation. As per the World Bank estimates on the per capita arable land holding in India is
reducing at faster pace from 0.16 ha in 1998 to 0.13 ha in 2011, and expected to reduce further. Thus the focus
to increase the productivity per hectare makes it imperative to use agrochemicals as the cost-effective solution
for crop protection.
Per capita Arable land comparison between developing and developed countries
Low crop productivity per hectare in India Vs World average:
Demand for food products will keep spiraling with the expected rise in population. But as overall land under
agriculture keeps decreasing, governments will focus more on increasing crop productivity/ yield per hectare.
The yield per hectare is amongst the lowest in the world – 2.9 tonnes per hectare as compared to 7.0 tonnes in
US, 6.2 tonnes in Japan and world average of 4.0 tonnes per hectare. This is forcing the industry to develop
innovative technology in seeds and crop protection chemicals in order to improve the productivity per hectare.
Even from the farmers’ perspective, improving the productivity is the only measure to improve their return on
investment (ROI).

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Yield per hectare- India Vs World
Crop- wise yields in India Vs World average
Increase in the end user awareness on pesticide use for crop protection:
Farmers’ awareness on using crop protection chemicals is growing with the industry’s continuous efforts on
educating them of their products use. The imperative of improving the farm productivity is making the farmers
to understand and adopt chemical usage. The next generation farmers are more entrepreneurial and are
concerned on their return of investment (ROI). This is widening the scope of usage of the agrochemical products
to improve their farm productivity.

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5. INDIAN AGROCHEMICAL INDUSTRY ANALYSIS: PORTERS 5 FORCES
Industry structure and positioning within the industry are the basis for models of competitive strategy promoted
by Michael Porter. The five forces determine industry profitability, and some industries may be more attractive
than others. The crucial question in determining profitability is how much value firms can create for their
buyers, and how much of this value will be captured or competed away. Industry structure determines who will
capture the value. But a firm is not a complete prisoner of industry structure - firms can influence the five forces
through their own strategies.
1. Threat of New Entrants-MODERATE:
a. Threat of new entry into Technical manufacturing market is low, due to the stringent Regulatory
and Registration procedures and also the capital investment to build the machinery and
equipment while establishing the plant, hinder the new entrants in tech production. Entry
barriers exist in terms of regulatory and environmental compliance to establish the plant
structure.
b. Entry into Formulations business is relatively easier than Technicals, with low capital
investment; threat of new entrants in generic formulation market is high. Entry barriers in
formulation business are low.
2. Bargaining Power of Suppliers-LOW:
a. The suppliers are in the form of Tech grade and formulators.
b. Demand for the molecule depends on the season and molecule’s comparative performance at
the end user level. Technical manufacturers need to modify their production planning basing on
the domestic and export forecast along with seasonal abnormalities. Companies in order to
meet their economies of scale in Technical production, they produce bulk quantities and later
face the issue of panic selling to the market, to avoid inventory costs.
c. Formulation suppliers in this industry also do not have the comfort of bargaining power, as
there is severe competition among formulations suppliers. Switching costs are less, in changing
the supplier, Hence buyers have the advantage of switching to new suppliers after the closure of
sale agreements.
d. Suppliers with strong channel network (forward integration) can reap the benefits of economies
of scale in production and profitability.
e. Large Multinational companies have the capacity to discover and develop innovative crop
protection chemicals, which are patented. Companies with patented products can exhibit their
power on buyers and demand premium.
3. Bargaining power of buyers-LOW:
a. Buyers are the end users and channel partners (Distributors and Dealers). Farmers are not brand
oriented and they lack knowledge on the right product to purchase. This is due to the lack of
awareness and education. Channel partners will have a say in what the farmer has to purchase.
As such buyers in this industry will not dictate or fix the price of the product.

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4. Competitive Revelry- HIGH:
a. Competition in generic molecules is huge with 125 Tech manufacturers and 800 formulators
allowing customers to switch and play between the competitions. Price sensitivity is very high in
generics market. Brand loyalty is minimal as the purchasing power of the end user is low.
b. On the contrary, companies with Proprietary/ patented molecules will enjoy monopoly of that
products and can have premium on generics. Customer-brand loyalty is observed for these
products.
c. Buyers take the advantage of the supplier (generic) competition and create the price
competition.
d. Exit barrios do exists in the form of capital investments, thereby paving way for Mergers and
Alliances with industry majors.
5. Availability of the substitutes-LOW:
a. One of the reasons when this industry is attractive is because of the lack of substitutes.
Companies can be profitable for their supply side is taken care of in terms of product
procurement or manufacturing.
b. Substitutes are available in the farm of Biological pesticides, which is still in a very nascent stage.
Product performance of the biological pesticides is unreliable and not standard, as these
pesticides are developed basing on bacteria or fungi which show detrimental effect on target
pest and diseases, have a set back if the weather is not conducive. Due to this reason Bio-
pesticides could not become popular or accepted as an alternative to the chemical pesticides
from the farmer level.
c. Although for specialty/ proprietary products of large companies, the threat of substitutes is very
less, but for generic products switching in between the products can happen due to the price
sensitivity.
To summarize on industry attractiveness and where the competitive advantage lies:
 Agrochemical industry is poised for growth in India, with both growth in domestic consumption and
ample scope of growth for exports. To feed the growing population, the necessity to improve the farm
productivity per hectare is very conspicuous, this situation made it imperative the use of agrochemicals
as their crop protection inputs.
 Threat of new entrants is MODERATE in formulations market, as there are not many entry barriers. But
for Technical manufacturing, threat of entrants is high, companies need to possess skilled manpower
and as well the requisite machinery & equipment, apart from the huge capital investment. Molecular
discovery and development is of high risk and capital intensive, only large multinationals have that deep
pockets.
 Bargaining power of suppliers is LOW- as there are many generic manufacturers and end users brand
loyalty is very minimal. Price sensitivity clashes with scale economies. Companies having strong forward
integration can sustain profits, along with manufacturing.
 Bargaining power of buyers in this industry is LOW for reason that the end user switching over to other
alternatives from agrochemicals is merely impossible.

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 Competitive rivalry in this industry is HIGH, primarily due to non-differentiation of the product and
umpteen generic suppliers. There is not much of competition in specialty or proprietary (patented)
molecule segment and companies can enjoy premiums for these molecules.
 Threat of substitutes is LOW for the time being, as the other alternatives like Biological pesticides have
not got the desired end user acceptance.
What can be inferred from the above points is that, Agrochemical Industry in India and World per se, is
attractive to invest, provided if you can manage the right product offerings/ crop solutions which can help
farmer improve the farm productivity and enhance his ROI. The key to remain profitable in this industry is to
have capability to invest in R&D to discover and develop new molecules, manufacturing capacity with strong
channel network in the market. Being innovative in developing the farm solutions and constant extension
services to the farmers will enhance your company’s image at the end user level and as well at the buyers’
market.
6. “SWOT ANALYSIS” ON INDIAN AGROCHEMICAL INDUSTRY:
STRENGTH WEEKNESS
1. Low-cost manufacturing and availability of qualified
low-cost manpower.
2. Technology and machinery equipment availability
which enables high quality product, at par with
MNCs.
3. Industry in the growth phase, both domestic
consumption (awareness) and scope for exports.
1. High R&D expenditure to develop new molecule
2. Need capital investment to set a manufacturing
and formulation facilities (plant).
3. Need for efficient distribution systems: India
being widespread, it would be difficult for any
company to ensure complete distribution in
India.
4. Dependent on monsoon and seasons.
5. Stringent registration norms to introduce new
molecules in India.
6. Awareness on potential health hazards for
pesticide usage
OPPORTUNITIES THREAT
1. Scope in domestic consumption: To improve farm
productivity per hectare, it is imperative to use crop
protection chemicals.
2. Growth in exports: Exports account for ~50% of the
total agrochemical production in India, and is
expected to grow to 65% by 2018.
3. Increasing awareness: Consumption of
agrochemicals is expected to grow as the companies
are constantly educating farmers on crop loss due to
the non-usage of pesticides.
4. About USD 6.3 billion worth molecules to go off-
patent from 2013-20 which is offering huge
opportunity for Indian generic manufacturers to
expand their market presence.
5. Increase in MSPs of a commodity does hold a
significant impact on the investment that a farmer
does. MSPs of many agro commodities are in the
uptrend, so it is expected that farmers will have a
reason to invest more and improve their
productivity.
1. Integrated Pest Management (IPM) & rising
demand for organic farming: with increasing
demand for organic food and awareness on
harmful impact of using pesticides, companies
will have pressure from government and social
groups to ban molecules which are harmful for
environment and mankind.
2. Counterfeit Products: The spurious pesticides
market size in India is estimated to be USD
233Mn in 2009. This negatively impacts the
revenues of the organized sector.
3. If the Biological pesticides acceptance increases
then they might pose a threat to agrochemicals.
As the income levels go up, the demand for
organic food grows, and thereby organic farming
grows and chances of low pesticide
consumption.

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7. EMERGING TRENDS IN AGROCHEMICAL INDUSTRY:
Adoption of GM Crops:
Since the introduction of GM crops in 1996, the production worldwide has grown from covering 1.7 mha (4.3
million acres) in 1996 to 125 mha (308.9 million acres) in 2008. Owing to the benefits of these crops, adoption of
GM crops has increased to 13.3 million farmers in 25 countries in 2008 from 7 million farmers in 18 countries in
2003. In 2008, the US followed by Argentina, Brazil, India, Canada, and China were the principal adopters of
biotech crops, with the US retaining its top world ranking with 62.5 mha (50 per cent of global biotech area). We
might see a decline in pesticide consumption if GM technology is widely adopted and accepted by the
consumers.
Adoption of Biopesticides:
Biopesticides are becoming increasingly popular and are safer than traditional chemical pesticides. As against
chemical pesticides, biopesticides are inherently less harmful and decompose quickly without leaving residues.
As an integral part of Integrated Pest Management (IPM) programs, biopesticides can greatly reduce the use of
conventional pesticides without affecting the crop yields. With such advantages offered by biopesticides, their
usage is being promoted worldwide. Biopesticides are expected to grow at a 15.6 per cent CAGR from USD 1.60
billion in 2009 to USD 3.30 billion in 2014. North America consumes the largest share (40 per cent) of the global
biopesticides production followed by Europe and Oceanic countries accounting for 20 per cent each. The R&D
status of biopesticides may be assessed based on the publications and patents. India has 3.55 per cent share of
the biopesticides related patents worldwide.
Increasing Mergers and Alliances:
With billions of dollar worth agrochemical patents expiring by 2020, global players keen to make the most of the
situation are looking to buy or tie-up with Indian companies known for their low-cost manufacturing expertise.
At least $9 billion (about Rs 61,000 crore) worth of patents for more than 50 agrochemical products are
expected to be taken off the patent list and manufacturing is likely to move to emerging markets like India.
Increasing environmental issues and ban on production of certain products in some countries were pushing
manufacturers to look at India, which currently exports over Rs 3,000 crore worth of agrochemicals every year
to the United States, Europe and other regions.
Technology Trends:
Technological innovations in agrochemical industry happening towards developing green chemistry or safer
chemicals which does not leave residues on the crop and environmentally safe. From the Indian consumer
perspective, the significance of green chemistry is not conspicuous. But if the GOI regulatory authority decides
to ban all the hazardous chemicals to sell in India, then the industry can expect a change in terms of
consumption. Industry generic manufacturers will have to modify their plant setup accordingly to oblige to the
new regulations. Currently Indian companies invest around 1.2 % of their revenues in R&D as compared to 12-
15% spend by the MNCs.
Focus on brand building:
Companies in this industry are working heavily on brand building on their products and company image itself.
Indian multinational companies are the front runners in branding their products and image. Companies are
trying to associate directly with the end user through some programs, like BASF’s Samruddhi and Tata Rallis-
Grow more pulses. BASF Company has touch upon more than 175000 soybean farmers in 2012 and helped them

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to bridge the knowledge gap in farming practices, so that the productivity is improved. In similar lines, Rallis
India’s ‘More Pulses’ project is working closely with farmers in TN, Odisha and Karnataka to train them on right
pesticide usage and application methods and ultimately improving the pulses productivity in India. Companies
are trying to find such innovative ways of promoting their brands (umbrella image) at the end user level.
From Agrochemical Companies to Agriculture Company:
Many companies in this industry now are turning out to be a complete agricultural company. For ex: Rallis India
has traditionally been a crop protection marketing company, but in the last few years it has transformed to
provide more value added solutions to farmers in this space. They have brought in seeds, Fertilizers, Plant
growth enhancers and spray equipment. They have started a farmer relationship building initiative “Rallis Kisan
Kutumb”, to provide extension services to farmers on improving the productivity. This way Rallis has
transformed itself from just Agrochemical Company to agricultural company.
8. CHALLENGES FACED BY INDIAN AGROCHEMICAL INDUSTRY:
Stringent regulations:
Stringent environment regulations across the world are increasing the cost of developing a new molecule and
simultaneously delaying their introduction into the markets. This is causing for hefty sunk costs and making the
product discovery and development almost unviable for the smaller companies.
Lack of resources in India to focus on discovery and long gestation period:
Except the large multinationals, no Indian company is focusing on discovery or development of new technology.
The reason being, lack of proper resources, financial and as well the manpower. There’s no support from the
government and agricultural department as well. The regulatory bodies do not have adequate sources and
infrastructure to execute timely registration of products. The rules are not clear and are left to the regulatory
bodies for their interpretations, leading to confusions, which elongates the gestation period for new
introductions and there by adding to the complexities for the crop protection chemical companies.
Market dependency on low-cost generics:
Indian Agrochemical market is dominated by generic products, almost to the share of 65-70% compared to the
advanced molecules developed by multinationals. The reason being there is demand from the farmers for these
low cost generics due to their low price. This high price sensitivity of Indian market is acting as a deterrent for
investments by multinationals in R&D to develop advanced molecules.
Lack of education and awareness on agrochemicals:
It is highly difficult to educate Indian farmers on appropriate use of pesticides owing to the infrastructure issues,
regional languages & dialects, poor education levels, communication means, etc. Given this background, the
dealer/ distributor acts as a middle man to transfer the product technology and also acts as the first point of
contact for any crop solutions.
Small land holdings & Credit availability:
Though there are statistics to prove that Indian farmer’s purchasing power has increased, still they are facing the
issues of credit availability. This issue is pretty evident with small and medium farmers due to their small land
holdings, an acre or less. These farmers have no option other than to depend on the dealer (channel) for their
agrochemical needs.

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Need for efficient distribution system:
A company can be said to be successful in India, if it ensures proper reach of its products across India. It cannot
be achieved without an efficient distribution channel. The challenge lies in the vast geography with variance in
the language and cultures. Availability of skilled manpower to ensure the geographic reach in certain geography
became a challenge for the industry.
Spurious products:
These are said to be the pseudo bio-pesticides or products that have natural material along with chemical
pesticide Active. There is no proper regulation in India to control their existence. These are posing threat to the
research based molecules such as Chlorantraniliprole, Flubendiamide, Spinosad, etc. The efficacy of these
products is not standard. The manufacturers of the spurious pesticides set to have small scale industries without
much of capital investment. If these products are not regulated the Agrochemical industry loses its
attractiveness to invest in R&D and there by no new technology offerings to Indian farming community.
9. COMPLEXITY IN RURAL MARKETING:
Rural marketing can better be defined in 4 words, which are Awareness, Accessibility, Availability and
Affordability. Agrochemical marketing is no different to the above logic, a marketer need to take care of the
above mentioned points while creating an effective marketing plan for the products.
Given the Indian circumstances prevailing in rural community on poor educational levels, economical levels, vast
geography and infrastructure issues; it becomes highly challenging and complicated job for any marketer to
ensure the above points are taken care of. Adding to the complexity, the low income levels of farmers forcing
them to stick to low cost agrochemical inputs to protect their farm production. This gave way for the generic
manufacturers’ proliferation in India. Multinationals are concerned about the ROI on the R&D investments in
India for advanced molecules. The long gestation period due to the regulatory procedures prevailing in India, to
introduce new molecules to India is adding to the agony relating to the R&D investments.
The credit availability issues of the farmers are taken to the advantage by the distribution channel to dispose of
the products which offer high margin or commission. This paved way for the entry of spurious/ counterfeit
products into the market, again courtesy to the poor control of the government or agricultural department
administrative authorities.
To summarize, no matter the effective strategy developed by the marketer for a product, whether the market
accepts or the end user accepts also depends upon the prevailing market situations other than the product
performance. This logic also applies for multinationals which are looking to enter into the growing Indian
agrochemical industry or looking for an alliance partner in India, has to thoroughly understand the complex
nature of Indian rural markets.
10. CRITICAL SUCCESS FACTORS FOR COMPANIES IN THE AGROCHEMICAL INDUSTRY:
i. Product portfolio:
No doubt about saying that Indian farmers adopted the use of Agrochemicals for their crop
protection and productivity enhancement. In the yester years, it was dominated by the insecticides,

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but now farmers are showing high interest on herbicides due to the shortage in labor availability and
cost implications as well. So the big pie itself is growing and companies need to maintain a good
range of the products to be successful in this Industry.
ii. Innovation:
Companies have to be investing in innovating their product/ service offerings to the farmers.
Innovation resulting in better offering compared to the existing and which can generate value to the
end user can be successful in the market. Innovation in plant production technology can help
generic manufacturers to enhance their export market.
iii. Develop umbrella brand:
Companies should develop their umbrella brand, so that connecting with the history becomes easy
when you introduce a new product, rather than building brands for individual products. For ex:
‘Tata’ is an umbrella brand and it becomes easier to connect a consumer with the umbrella brand
and a marker’s job would be pretty easy to establish individual product brands.
iv. Relationship with farmer (end user):
Agrochemical industry is the one wherein the company is direct in touch with the end user, unlike in
FMCG where they promote products through ATL advertisement campaigns. But most of the
promotions in this industry are through BTL, i.e. Word of mouth publicity and individual contact. So
it is imperative to have a constant relationship with the end users to create awareness and establish
the brands.
v. Efficient distribution channel:
Channel is very critical to be successful in India, vowing to the infrastructure and supply chain
complexity in different states. Companies with maximum reach will have a high probability to be
successful with their products presence all across.
vi. Technical Training to stakeholders:
Companies have to invest in rendering product technical trainings to all the stakeholders, like
farmers, dealers, wholesalers, agriculture department officials and other people who promotes the
product.
vii. Be part of value chain:
Companies have been strategizing to be part of the agricultural value chain. Initiatives by companies
are seen in terms of training to the farmers on crop package of practice, crop consultancy,
marketing assistance of the farm produce, providing farmers information on crop insurance to
adverse climate, etc. These initiatives have supported and motivated the low morale of the farmers
to improve their productivity and thereby improving their livelihood.
viii. Partnership or Alliances:
Many companies are either partnering or forming an alliance with other companies to share the cost
of developing a new molecule in India. Considering the generic dominance in India and prevailing
long gestation for introducing new products, it is highly difficult to estimate the future trends and

19
competition in India. Hence, it would be prudent to share the development costs and sustain
through the new product launches.
11. THE WAY AHEAD:
India is one of the important developing countries in Asia Pacific. Indian Economy is primarily depends on
Agriculture and about 75% population depends on agriculture.
Modern agriculture depends on the four main factors viz: water, fertilizers, seed and pesticides. Pesticides are
the integral part of modern agriculture. About 35-45 % crop production is lost due to insects, weeds and
diseases, while 35% crop produces are lost during storage. Indian Agrochemical Industry size in estimated to be
US$ 4.1 billion in year 2013 and is expected to grow at 12-13% per annum to reach 7.0 billion by 2018. The
Indian domestic demand is growing at the rate of 8-9% and export demand at 15-16%.
Indian agrochemicals market is supported by strong growth drivers. 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. About USD 6.3 billion worth molecules to go off-patent from 2013-20 which is offering huge opportunity
for Indian generic manufacturers to expand their market presence.
The consumption of agrochemicals in India is on constant raise, especially in Herbicide and Fungicide segment.
There are many factors to it, like, increase in the awareness of agrochemicals, labor cost and availability,
sustenance in food productivity enhancement, raising levels of rural income, etc. The development in
agricultural allied industries like food processing, storage and logistics has a spillover effect on the agricultural
investment. Government support w.r.t the MSPs of agro commodity prices, subsidies, second green revolution,
NREGA scheme of rural employment, rural connectivity through roads and information technology have brought
momentum in rural economical standards and its repercussions are seen in agricultural investment/
productivity.
Although we say that rural economical standards are rising, still there’s a lot to see for it, as still the small and
medium farmers are facing the credit availability to invest on agriculture. Awareness on pesticide
appropriateness and their proper usage also is a challenge, as their lack of knowledge became an opportunity
for the dealers to deprive them till the last penny. Lot of inclusive and constructive initiatives has to be
implemented by the Government and agricultural department to uplift the economical standard of the farmer.
Companies in this industry have played a pivotal role in educating the farmers on the appropriate use of the
pesticides, brought awareness on their significance in crop protection and improving the farm productivity.
Some of the companies have taken part in the agricultural value chain to improve the farm productivity, by
rendering their expertise knowledge and consultancy services on crop package of practices and crop protection.
Some companies have transformed into a total agricultural solution provider, by extending their product
offerings to fertilizers, seeds, nutrients, etc. All these efforts are very inclusive to maintain the connectivity with
the farmers.
Product Innovation, training & service, value creation, awareness on appropriate use of pesticides to the farming
community will be the ‘way ahead’ for the companies and that would be the success mantra to keep pace with
the growing agrochemical industry.

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References
http://www.researchandmarkets.com/reports/2102645/agrochemical_industry_in_india_swot_analysis
http://www.business-standard.com/content/b2b-chemicals/indian-agrochemicals-market-to-reach-6-8-bn-
by-fy17-tata-strategic-management-group-113081200449_1.html
http://www.tata.co.in/company/reportsinside/Qgh7QUyh6Xc=/TLYVr3YPkMU=
http://entrepreneurindia.in/people/gettingthere/the-pesticides-business-in-india-is-a-source-of-untapped-
market-potential-says-dhirendra-kumar-of-camson-biotechnologies/18221/
http://www.marketresearch.com/IS-Advisors-v3900/Agrochemical-India-6712341/
http://www.marketresearch.com/product/sample-6712341.pdf
http://www.tsmg.com/download/reports/Safe_&_Judicious_use_of_Agrochemical.pdf
http://news.agropages.com/UserFiles/Report/Pdf/20130116113619ca6b.pdf
http://www.ficci.com/spdocument/20292/petro1.pdf
http://www.chemtech-online.com/CP/Soumitra_Sangeeta_April12.html
http://news.agropages.com/News/NewsDetail---10649.htm
http://articles.economictimes.indiatimes.com/2013-08-29/news/41582260_1_insecticides-india-indian-
companies-indian-firms
http://www.scribd.com/doc/7201372/Agro-Chems-Indian-Agrochemical-Industry
http://www.frost.com/prod/servlet/press-release.pag?docid=274540186

Agrichemical industry in india overview, scope & challenges

Agrichemical industry in india overview, scope & challenges

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