Investing in R&D outweighs the cost-effectiveness of importing technicals: GSP Crop Science
Exclusive: Interaction with Mr. Tirth Shah, International Business Director at GSP Crop Science sharing his views on investment in R&D and the prospect of PLI scheme in the agrochemical sector – with Mr. Nimish Gangrade, Editor of Krishak Jagat – Global Agriculture.
03 April 2023, New Delhi: Agriculture is an important part of the Indian economy, employing more than half of the people and contributing significantly to the India’s GDP. The use of agrochemicals to improve crop yield and quality has increased in India, but a significant portion of the technicals needed to manufacture these chemicals are imported from other countries, mainly China. In such a scenario, agrochemical firms must invest in R&D to create and manufacture indigenous technicals, reduce reliance on imports, promote the Make in India movement, and become more cost competitive.
GSP Crop Science Pvt. Ltd., an agrochemical manufacturer sees research and development as a critical instrument for ensuring the agricultural sector’s long-term viability. While technicals can be imported, the company believes that investing in R&D has many long-term advantages that outweigh the cost-effectiveness of importing technicals.
“R&D investment is critical for the agrochemical industry because it enables companies to create and develop new products that are more effective, efficient, and environmentally friendly. The R&D method helps to find innovative ways to manufacture products, reduce production costs, and improve overall product quality. As a result, businesses can provide better and more cost-effective goods to customers, increasing their market competitiveness”, said Mr. Tirth Shah, International Business Director at GSP Crop Science.
The company is using innovative methods to improve its R&D capabilities to create safer and more effective agricultural solutions. The business is investing in biotechnology, gene editing, precision agriculture, and digitalization.
Reducing dependence on China
Mr. Shah told Krishak Jagat, “One major advantage of investing in agrochemical R&D is that it reduces dependence on China, which is the main source of technical for the Indian agrochemical industry. Geopolitical conflicts between India and China have risen in recent years, creating uncertainty in the supply of technicals. As a result, the Indian agrochemical sector has been forced to seek alternatives to Chinese imports. Investing in R&D to develop indigenous technologies can help reduce dependency on China and increase the country’s self-reliance in agriculture.”
Another major benefit of investing in agrochemical research and development is the promotion of the Make in India movement. The Indian government has long advocated for domestic production and manufacturing to boost the country’s economy and decrease reliance on imports. Investing in R&D for indigenous technical development aligns with this goal and supports local production, job creation, and economic growth.
A critical element driving investment in agrochemical R&D is cost competitiveness. Developing indigenous technologies through R&D contributes to lower total agrochemical production costs, making them more affordable and available to farmers. This, in turn, boosts agrochemical firms’ market competitiveness and allows them to capture a larger market share.
PLI Scheme for Agrochemicals
As part of its Atmanirbhar Bharat (self-reliance India) campaign, the Indian government recently announced a Production-Linked Incentive (PLI) plan for the agrochemical sector. The PLI scheme aims to improve India’s position in the global agrochemical market by increasing domestic manufacturing and decreasing dependence on imports. The plan is anticipated to provide a significant boost to India’s agrochemical industry, which has been steadily growing in recent years.
Mr. Shah said, “Subject to certain circumstances, the PLI scheme offers incentives to companies for incremental sales of agrochemical products. The program’s goal is to encourage manufacturers to create high-value products that are presently imported, thereby promoting the Make in India campaign. The incentives are anticipated to encourage businesses to invest in R&D, modernize their plants, and improve their supply chain management over a five-year period.”
Given the country’s vast agricultural base and rising food demand, the Indian agrochemical industry has enormous potential. With a growing population and shrinking arable territory, crop yields must be increased to satisfy food security requirements. Agrochemicals have become a necessary component of modern agriculture and will continue to play an important role in increasing crop yields and ensuring food security.
“India’s agrochemical industry has been steadily expanding, with a market size of approximately $4.2 billion in 2020. Between 2020 and 2025, the sector is expected to expand at a CAGR of around 9%, driven by rising food demand and increased adoption of modern farming techniques. The PLI scheme is anticipated to provide a significant boost to the sector, attracting investments worth approximately Rs 14,000 crore over the next five years”, mentioned Mr. Shah.
The PLI scheme is anticipated to benefit the Indian economy by creating new jobs, increasing exports, and decreasing imports. The scheme is anticipated to generate 50,000 direct and indirect jobs, as well as increase exports by Rs 15,000 crore. The scheme is also anticipated to reduce India’s reliance on imports, especially from China, which accounts for approximately 65% of India’s agrochemical imports.
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