Indian crop protection chemicals (CPC) market is expected to grow by 3.2 per cent per annum buoyed by rising buying power of the farmers, Rabo India has said in a report.
"The Indian CPC market is expected to grow by 3.2 per cent per annum in value terms in the next two to three years," the report said.
The CPC industry includes pesticides, insecticides and other chemical compounds used to protect crops.
Stating that the future prospects of the CPC market look positive, the report said this is largely because of the increasing number of varieties of insects, pests and diseases, which are becoming resistant to the available pesticides.
"Interestingly the trend of sluggish volume growth rate for CPC use over the last decade is now changing, as a result of shifting cropping patterns, increased awareness, brand consciousness and better price realisations to the farmers for their produce," the report said.
"It is expected that CPC sales in India will see a strong recovery in 2010, with more favourable weather, rising commodity prices and government policy initiatives...," the author of the report, Vaishali Chopra, said.
Rabo India also expects that domestic players might go for merger and acquisition and joint ventures with their foreign counterparts to get access to newer CPC molecules in order to become more competitive.
"As most CPC companies are generic manufacturers, in most cases they are expected to enter into joint ventures or mergers and acquisition deals with foreign players to get access to newer CPC molecules. This will certainly enhance their product portfolio and make them more competitive in the global CPC market," Chopra said.
There is also a huge opportunity for exports in the sector, according to the report.
"Nearly half of the CPCs manufactured in India are exported. Indian CPC companies' low cost advantage has made the export market particularly attractive. Export growth of crop protection chemicals is expected to continue as herbicides and fungicides outpace insecticides," Chopra said.
Rabo India Finance is a fully owned subsidiary of wholesale and retail bank Rabobank International.
