India's crop protection market is expanding. Driven by rising agricultural demand, increasing adoption of sustainable practices, and a growing focus on exports of generic crop protection products. But what are the short- and medium-term outlook for crop protection in this booming economy?
Kamlesh Punjabi, Senior Director, Crop Subscription Services, Southeast Asia region and India, gives his view on the direction of travel:
″With the need to increase agricultural productivity and guarantee food security through ongoing innovation and the widespread adoption of sustainable practices, India's crop protection market is expanding favourably. We expect this to have a substantial and long-lasting impact on the country's agricultural growth in the years to come.
Innovative products are changing the industry, and this change is being fuelled by intense research and development efforts. As an illustration, the market for crop protection has seen a noticeable change in favour of biotechnology integration. Moreover, the use of crop protection chemicals will be transformed by the introduction of precision farming methods that incorporate technologies like sensors, satellite images, data analytics and digital technology.
The need for effective and sustainable crop protection solutions is predicted to rise as more farmers embrace modern agricultural techniques and realize how important it is to safeguard their crops.″
India: An Enviable Growth Rate
A backdrop of a positive economic trajectory sets the context for the growing crop protection market. India shows the highest growth rate among major economies in the global outlook for 2024, after the International Monetary Fund (IMF) upgraded its forecast for India's GDP growth to 6.8% (from 6.2%) for the fiscal year 2024/25. Major agricultural commodities are currently trading at high prices, and domestic demand for crop protection products continues to be strong.
Food inflation remains high. Headline inflation sits above the Reserve Bank of India’s (RBI) target of 4.0%, projected at 5.4% YoY in the first half of 2024. Relief is in forecast for the remainder of the year though, subject to an expected monsoon season.
Policy approaches are expected to be established regarding exports; currently key commodity crops are subject to export restrictions as a method to cool domestic food inflation.
Key Cropping Performance: Rice & Wheat
El Nino negatively influenced 2023/24’s kharif season, resulting in a decrease in rice production and leading to supply constraints. Despite this, the United States Department of Agriculture's Foreign Agricultural Service (USDA FAS) forecasts a 1.7% increase in rice area, and an increase in volume of 135 million metric tons in 2024/25, up from 132 million metric tons.
In wheat, USDA FAS projections indicate steady growth of 1.3% in area, and 1.8% in production in 2024/25. The outlook is positive; however, the cumulative decline in wheat yield, attributed to a series of extreme weather occurrences in past years, continues to be a concern.
Market Drivers and Trends: 2024 to 2029
Given the outlined positive macroeconomic circumstances, there are many opportunities in the Indian crop protection market both in the short and medium term.
Embracing Innovation and New Products
In the short term, the use of drones for agricultural purposes is in its initial phase but is anticipated to expand rapidly. While the current count is approximately 3,000 drones, projections indicate a substantial rise in their numbers. In April 2024, the Ministry of Agriculture extended the provisional approval for the sanctioned use of drones to apply pesticides by one more year. This extension is aimed to support the industry in adapting to this emerging application technology.
Growing domestic and export demand has resulted in crop protection brands expanding, both in new formulation and technical manufacturing capacities across existing and new sites.
India's crop protection exports surged to a record US$ 5.4 billion in the fiscal year 2022-23, up from US$ 4.9 billion the previous year. This marks a significant 108% increase from the US$ 2.6 billion exported in the fiscal year 2017-18.
In 2025, a shift toward smart farming practices is expected. By utilizing technologies like apps, drones, and field mapping, farmers are looking to technology to increase efficiency, save cost and work to best practice. To further support this, The Ministry of Agriculture & Farmers Welfare in India is incorporating Artificial Intelligence (AI) technologies to enhance farmer productivity. Private companies getting involved in emerging agricultural technologies are expected to make a big difference through 2025.
The biologicals market in India is forecasted to grow at 16% CAGR in 2025 (currently valued at ~US$200 m ex-manufacturer). Growth drivers include rising organic food demand and government support for sustainable farming.
Medium term, over the next five years, India will continue in its transition toward smart farming practices. Yield preservation is likely to be a key focus, particularly through weather-resistant varieties.
Cost Challenge for Farmers
In 2023, the Indian crop protection industry faced big challenges: high raw material costs and surplus inventory; resulting in a significant decline in share prices of domestic crop protection companies.
In 2025, we expect volume-led growth, as the shift from price-led continues. Signs of improvement are starting to show, as raw material supplies from China increase. Technical equivalent costs are expected to be lower. Consequently, the prices for crop protection products in India are expected to remain stable, with a possibility of lowering.
By 2029, India is likely to have shown fast paced and consistent growth in crop protection. The rise will likely be attributed to increased product usage, driven by rising demand for locally grown crops, government support, and economic growth.
Though a volume-led growth is expected in the short term as mentioned, we expect a balanced growth of volume and price likely by 2029. This is likely with increased adoption of smart farming, seed treatment products, phasing out of older chemistries with relatively newer products, growth of newer categories such as biostimulants and biological crop protection.
Impact of Generics
The expiration of patents on several crop protection active ingredients in 2023 and 2024 is likely to lead to cost-competitive generics entering the market. This increased competition is likely to also lower prices for products still in-patent.
Changing Regulatory Environment
In early 2023, the Central Government issued a draft order to prohibit two insecticides, Dicofol and Methomyl, and one fungicide, Dinocap. This follows an earlier notification issued in 2020 by the Ministry of Agriculture, suggesting the prohibition of 27 pesticides. However, regulation seems to favour the continued use of the remaining 24 active ingredients, so no immediate shifts in the market are expected in the short term.
The Central Insecticides Board and Registration Committee (CIB & RC) Secretariat, under the Directorate of Plant Protection, Quarantine & Storage, is in the process of revising the import sources and updating the roster of domestic insecticide producers as of May 1, 2024.
The Registration Committee (RC) examined the devised format and instructed that it be posted as a public notice and that digital logs of the permitted quantities of pesticide samples for export for research, trials, and tests be maintained. Additionally, the RC expressed a preference for the current RTT (Review, Test, and Trial) protocol for imports to be applied to exports as well.
In 2025 we look forward to regulatory consistency. Regulatory changes, resistance issues, and improved intellectual property legislation are influencing the choice of crop protection products.
India is expected to continue prioritize food security and farm income over stringent pesticide norms.
Similar trends are expected in the medium term to 2029.
Source: Kynetec
