India's agrochemical industry, which is at present estimated to be around $10 billion, is likely to reach upwards of $14.5 billion by the end of financial year 2027-28, as per a report by Rubix Data Sciences, an analytics services provider. In the just concluded financial year 2023-24, it though saw a degrowth of 3 per cent, the report said. Several key factors contributed to this setback.

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The influx of competitively priced products from China further exacerbated the situation last fiscal year. Firstly, the export market, which traditionally commands over 50 per cent of the industry's revenue, faced sluggish growth. This can be attributed to a global destocking trend, where international players likely opted to reduce their inventory levels, the report noted.

The industry has a positive outlook, and is conservatively projected to grow at a 9 per cent compound annual growth rate (CAGR) by 2027-28. India has become the world's second-largest agrochemical exporter, with its trade surplus almost doubling from $1.8 billion in 2018-19 to $3.6 billion in 2022-23. This robust growth is indicative of India's increasing importance in the global agrochemical export market. The US and Brazil retain their spots as the top two export destinations for Indian agrochemicals over the past five years.   

"The government has implemented various measures to bolster domestic manufacturing, including designating agrochemicals as one of the 12 champion industries and restricting the import of unregistered pesticide formulations," said the report. Though the industry faces common challenges such as competition from Chinese imports, high reliance on generic molecules, the growing interest in bio-pesticides and organic farming, and it not being part of the government's Production-Linked Incentive scheme. Leading players are actively investing in facilities to achieve backward integration, aiming to reduce their dependence on imported raw materials, the report added.