Indian Agri Input Industry:: Key Challenges and Opportunities: Research Report

indian agri input market

Overview of Indian Agri Input Industry:

Indian Agri input industry

The agricultural sector is the largest employer in India's economy and is expected to grow above-trend at 4.1 per cent to Rs 1.11 trillion, according to Central Statistics Office (CSO). Also due to the growing demand for green agriculture products there is a window of opportunity not only for the Indian agriculturists but also for various agriculture inputs.

Agri-input companies have played a significant role in transforming the post-Independence Indian economy from dependent on food grain imports to a self-sufficient economy.

The use of fertilizers in India has grown nearly 170 times post independence, but on the other hand there is a decline in consumptions of pesticides due to increased awareness of health hazards.

As a consequence, adoption of green inputs market in India has increased.

The green revolution in India increased the self confidence in agriculture capability, which led to the next phase known as White & Yellow revolution which is a technology mission focused on end to end approach in the production-consumption link.

And now when a large number of users are shifting from traditional Internet to mobile Internet, M-commerce is all likely to overtake e-commerce with the ever increasing penetration and affordability of smartphones, popularity of mobile apps, convenience of connectivity, speed of data transmission and increasing social influence.


AI in agriculture


India’s share in world’s population : 17.5%

India’s share in world’s livestock : 15%

Share of agriculture in India’s GDP: 16.5%

Population depend on agriculture: >55%

India has the largest area of arable and permanently cropped land in the world: ~ 169.36 Mha

Agri Inputs


  • Fertilizers (manures)
  • Agrochemicals.(to protect plants from diseases, pests)
  • Seed
  • Cattle feed
  • Veterinary medicines


  • Tractors
  • Agricultural machineries

Further Agri input business can be segmented as:

  • Agronomy
  • Horticulture
  • Dairy
  • Fisheries
  • Poultry
  • Livestock for meat
  • Forestry

Market size of Indian Agri Input Industry

  • Fertilizer market size for 2017 is estimated to be : US $11.59 Billion
  • Indian Agrochemicals market size for 2017 is estimated to be: US $6.8 Billion
  • Indian Seed market size on 2013 was: US $2.7 Billion with a CAGR of 12%, Therefore the estimated Seed market size for 2017 is: US $4.25 Billion
  • The current size of India’s animal feed industry which includes poultry, aqua and meat, is  US $15 billion and growing with a CAGR of 8%, Therefore, the estimated animal feed market size for 2017 is: US $2.41 Billion
  • The Indian animal healthcare market is estimated to be : ~ US $1 Billion


Key Players in Indian Agri Input Industry


Transformation in the agricultural input industry and rapid growth in demand for agricultural inputs has increased competition in the input industries by large Indian firms and multinationals.

In the recent past, there have been many experiments in the agri-input sector in terms of the operational model by different players.

With rising awareness amongst Indian farmers on commercially oriented farming is a function of improved information access, rising affordability, and entry of an educated new generation of farmers.

Increased efforts from the private sector to educate farmers about the benefits of using quality agri inputs have helped the farmers to derive better commercial value from their produce.

There are ~700 agri input players (small & big) in India currently.


Operational model used for Agri input

Traditional mainstream channel of selling through distributors and dealers/retailers.

Some companies have new channels range from marketers own outlets to supermarkets to franchised outlets.

Capital input players are also practicing custom rentals of farm machinery.

Major player like ITC is focused on the service element to improve the customer centricity by aiming to introduce new lots, new varieties, new packaging and non-standardized orders though the new model.

Many companies are using the e-Commerce platform with aim to empower farmers by providing them with quality agro inputs and accessories through a marketplace platform.

ITC again in e-Commerce is operating under e-Choupal web site where all information on weather, modern farming practices, and market prices from sources like Meteorological Department, Agri-universities, mandis etc is customized according to local farmers requirements and provided into the local language through computer set up by ITC in Sanchalak’s house.

Also providing facility of group purchase, coordination farm equipment leasing and insurance are some other methodology used by players to penetrate in the market.

AgroStar sells nearly 1,000 products which include seeds, fertilizer, pesticides and agri-implements, through its mobile-commerce platform. Farmers are required to give a missed call and the company executives do the follow-up. The company claims to receive 1,500 to 2,000 calls every day. Since its launch two years ago, the start-up claims to have received 900,000 missed calls.

Operating Challenges in Indian Agriculture

Farming is a region-specific activity and hence it is a big challenge for the company to cater to region-specific needs as it expands to new markets.

Sourcing of quality products and keeping those in warehouses to be delivered in time is another challenge.

Most of input products are procured by farmers on credit from local vendors thus creating a challenging environment of making them switch over to cash payment.

Replication of the existing operators creates a continues competition into this industry.

The problem of high transport cost due to poor infrastructure, lack of market information, lack of storage facilities and poor communications generally result in high costs and delivery problems for farm inputs.

Also due to lack of finance and inadequate information leads to limited use of modern inputs.


Challenges in agriculture


Opportunities in Indian Agri Input Market

Availability of government subsidy should be used to explore the input market in the right way.

The increased awareness of green farming as opened door for more suppliers for similar inputs.

Continues low production and productivity increases pressure to improvise thus leveraging more sophisticated inputs.

With increased penetration of internet and smartphone in rural areas , one can use m-Commerce to tap on the input market and connect to the farmers directly.

With an estimated growth of 9.5% in IT sector, IT is taking an important and key role in industrialization of farming.

The tool for IT is providing networking for agriculture locally as well as globally.

Potential reduction in agriculture risk and increased income, the e-agriculture sector give an vast scope of growth for existing/new market players.

New age Distribution Model shall look like as below:

rural distribution model


Contributed by:

Agri focused Advisory firm Redwood Syndicate

You can reach them at:



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Author: dwapp