Is India a Future Manufacturing Hub for Agrichemicals?

By  Somnath Nandi

The changing scenario in global trade has made a significant impact on agrichemical business in India. Although the country is still facing a lot of challenges for availability of intermediate and technical products due to high dependency on Chinese production, there has been some internal reorientation of production shifting from China to India.

In the last year, sudden changes in agrichemical import policy have affected the potential import opportunity for India. To balance the market situation, all companies — technical manufacturers, formulators, distributors, etc. — involved in the supply chain have devoted their profit margin to this situation. But a sudden increase in prices — in many cases more than 100% — meant the final outcome was that the farmer had to bear the increased price.

Three significant changes — U.S. position on Chinese Import, the strict pollution norms in China with its commitment to the green environment, and India’s stand to boost the “Make in India” — are playing synergistic consequences to grow India as the next- generation manufacturing hub for agrichemicals. Many Indian basic chemicals manufacturers have also increased their capacities to minimize the supply-demand gap as they are now rewarded with better prices globally.

It has become time to answer whether India is competent for manufacturing agrichemicals. If so, what kind of infrastructure has the country developed in the last year? India needs some new generation molecules to get produced in the country and strong backward integration of safer molecules to become independent in production.

In comparison with other semi-regulated markets, the Indian registration process restricts some progressive companies to take a chance to enter into the Indian market due to the absence of any data protection of new molecules. The strict policy of withholding import registration in India has loosened to some extent and the newly framed guidelines for registration of agrichemicals surely supports the cost effective registration of manufacturing. The obvious question is: why is Indian development in agrichemical manufacturing still very slow?

New molecules and formulations are entering into India mostly through the import route rather than the manufacturing route. While many Indian companies have registered new molecules and their formulations for manufacturing to export to different markets, Indian farmers still have no access to such developed technologies.

The new government policy, allowances of 100% FDI in chemical sectors, and allocations of chemicals zones are all significant developments that support “Make in India.” It may be that a data protection guideline for first-time indigenous manufacturing for any new technical and its formulation — and not necessarily the data protection for registration through import — will actually support the true and progressive manufacturer in the country. Otherwise, India will continue only to produce generic products as it has been doing over the last few decades.

Source: Agribusiness Global (press release) (blog)

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