Backward integration: Empowering Indian agrochemical companies to control their supply chain

The Indian agrochemical industry is witnessing remarkable growth, driven by a number of factors including increasing population, rising food demand, export opportunities, and technological advancements. With a substantial labour force and lower production costs compared to many other countries, Indian manufacturers have the advantage of producing agrochemicals at competitive prices relative to their foreign counterparts. India has emerged as a major player in the global agrochemical market, driven by a growing demand for crop protection products.

VIMAL KULSHRESTHA, President, Crop Protection, Hikal Ltd

Previously, the production of agrochemicals in India heavily relied on imports of raw materials and intermediates. In the context of the Indian agrochemical industry, backward integration involves acquiring or building the necessary infrastructure and resources for producing raw materials used in agrochemical production.

Need for Backward Integration: During the pandemic, the lack of these supplies and port congestion caused significant delays in purchases which had a profound impact on manufacturing and export patterns. Consequently, manufacturers and suppliers are re-evaluating their production and distribution strategies to overcome potential challenges. India is home to numerous domestic and global agrochemical companies, while also importing a considerable amount of agrochemicals. Backward integration offers several benefits for the agrochemical industry.