ATM News Network: Agricultural chemical companies are investing more in India, which has a massive farming industry that has been slow to adopt products like weedkillers and pesticides. Japan's Nissan Chemical Industries is set to open a £37 million plant this month in the western state of Gujarat.
The factory is a joint venture with local partner Bharat Rasayan and marks a full-fledged entry into the market. The United Nations expects India to overtake China as the world's most populous nation this year, and about 60% of its population lives in rural areas where farming is widespread. The country ranks second to China in rice production and is a significant producer of wheat, sugar cane and millet.
Indian credit rating agency CRISIL sees agrochemical revenue continuing to grow by double digits this fiscal year, citing brisk domestic and foreign demand. Companies including Godrej Agrovet, part of India's Godrej Group, and Safex Chemicals India are expanding their agrochemical-related capital spending in fiscal 2022/23, including expanding an herbicide plant and opening a new research centre.
Bayer, one of the big multinationals, started a €24m plant in 2020 to produce the insecticide ethiprole. It operates seven production facilities in India and looks to build relationships with farmers through moves like a partnership with a crop transportation startup.
India's agrochemical market was worth about £4.3 billion in 2021, less than a quarter the size of China's, according to Euromonitor. Data from the United Nations Food and Agriculture Organization shows that the US uses seven times the amount of chemicals per arable acre that India does, and Japan 30 times as much.
The low uptake owes partly to the many small farmers in India, and the slow adoption of modern agricultural practices. Observers argue that agrochemical production is crucial for India to modernise its farming industry and ensure a stable food supply.
Companies are watching for any incentives the government might have to offer. New Delhi has worked to lure auto and electronics manufacturing under its "Make in India" initiative. With agrochemicals garnering attention as a promising export industry as patents expire and production shifts from China, local media reports suggest that an industry group is lobbying to add the field to the government's production-linked incentive scheme.
Expanding the market will come with challenges, such as educating small farmers about how to choose from among the many products and how to use them. Japanese firm Nihon Nohyaku launched a trial in October of an app that uses artificial intelligence to identify diseases, pests, and weeds, and suggests products to deal with the problem.
Sumitomo Chemical's Indian arm posts product information in 10 languages on social media. Growth could be inhibited by consumer concerns about health and environmental effects, as well as infrastructure and supply chain risks.
Demand might be dampened if farmers do not see the benefits they expect from agrochemicals. "Indian agriculture has issues not just with agrochemicals, but also with seed quality and fertiliser balance," said Yukiko Nozaki, chief analyst at the Mitsui & Co. Global Strategic Studies Institute.
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