Agrochemical Industry Forecasts 6-7% Growth in FY26 Driven by Export Revival
India's agrochemical industry anticipates 6-7% growth in FY26, primarily fueled by a strong revival in exports after two weak years. Domestic demand remains subdued due to prolonged monsoon affecting kharif sales. Crisil Ratings predicts an 8-10% growth in FY27, contingent on sustained export momentum and a domestic market rebound. Exports, contributing half of industry revenue, are stabilizing globally. Margins are expected to remain stable at 12.5-13.0% due to steady realisations and benign raw material prices, with overall growth being volume-driven.
India's agrochemical industry anticipates 6-7% growth in FY26, primarily driven by a robust revival in exports after two weak years, according to Crisil Ratings. However, domestic demand remains muted, significantly impacted by a prolonged monsoon that affected kharif-season sales. The industry targets 8-10% growth in FY27, contingent on sustained export momentum and a rebound in local consumption. Exports, contributing nearly 50% of industry revenue, are improving as global supply chains stabilize, with Latin America (34%), North America (19%), and Europe (12%) being key markets. The US market is stable, with Indian shipments largely tariff-exempt.Despite improved global farm sentiment boosting export revenue by 8-9%, domestic demand will suffer from excess rainfall causing crop damage and delayed field readiness. Crisil's Anuj Sethi noted that the 6-7% growth outlook is volume-driven, with realisations stabilizing after two years of sharp corrections. Operating margins are projected to remain stable at 12.5-13.0%, supported by steady realisations, benign raw-material prices, better operating leverage, and cost controls. This figure is still below the pre-pandemic peak of ~15%.China's easing inventory overhang has stabilized domestic prices and import realisations. The industry's financial health is expected to improve, with debt-to-EBITDA likely around 1.3 times and interest coverage rising to 7 times, driven by modest capex and disciplined working capital. Annual investments of about ₹5,500 crore in import substitution, new registrations, and debottlenecking will continue. Key risks include climate disruptions, regulatory tightening, and currency volatility.
