New Delhi, May 24 (KNN) The Indian agrochemical industry, which saw a minor 3 per cent downturn in FY24 with revenues around USD 10.3 billion, is projected to reach USD 14.5 billion by FY28, rebounding at a 9 per cent CAGR, according to a Rubix Industry Insights on Agrochemicals report.

Despite consistent expansion over the past decade, the industry experienced a temporary contraction in FY24 due to factors such as a global destocking trend, an influx of competitive products from China, and reduced demand during the rabi season caused by low reservoir levels.

However, the report forecasts a strong resurgence fuelled by sustained government support, technological advancements, and expansion of the export market.

The report highlights India's unique characteristic driving the industry's growth potential. Currently, India's agrochemical usage stands at a mere 0.6 kg per hectare, significantly lower than the Asian average of 3.6 kg/ha and just a quarter of the global average of 2.4 kg/ha.

This low utilisation indicates immense potential for market expansion in the coming years, providing a fertile ground for the industry's growth.

India has emerged as the world's second-largest exporter of agrochemicals, with the United States and Brazil being the top two export destinations. Exports account for over half of the production, exceeding domestic sales.

India's agrochemical exports have risen from USD 3.1 billion in FY19 to USD 5.4 billion in FY23, with herbicides dominating the category. The share of herbicides in total exports has increased from 31 per cent to 41 per cent between FY19 and FY23.

The industry's growth has been driven by factors such as a thrust on backward integration to reduce dependency on Chinese imports, diversification of product portfolios, an increase in the registration of new agrochemical molecules, and regulatory support for curbing imports to boost the prospects of Atmanirbhar Bharat (self-reliant India).

Initiatives like the Drone Didi scheme to encourage drone application and the government's focus on digital services through the Digital Agriculture Mission are also seen as growth drivers.

However, the report highlights challenges faced by the industry, including limited research and development efforts resulting in high reliance on generics, low availability of raw materials, a lack of very large production facilities, and exclusion from the production-linked incentive scheme.

The report underscores the rising demand for agrochemicals, noting that the average capacity utilisation across the industry exhibited a steady upward trajectory, reaching 68 per cent in the period from FY18 to FY22. This growth trajectory remained consistent, barring a temporary dip during the Covid period.

(KNN Bureau)