India’s agrochemical industry is poised to grow 6–7 percent in FY26, supported by a strong revival in exports after two weak years. However, domestic demand remains muted as the prolonged monsoon has affected kharif-season sales, according to Crisil Ratings.
Export Momentum Drives Growth Despite Weak Domestic Demand
The industry’s return to 8–10 percent growth in FY27 will depend heavily on sustained export momentum and a rebound in local offtake. Exports—contributing nearly 50 per cent of industry revenue—are improving as global supply chains stabilise. Latin America accounts for 34 per cent of export earnings, followed by North America (19 per cent) and Europe (12 per cent). The US market remains steady, with 80–85 per cent of Indian shipments exempt from tariffs, allowing India to supply about 20 per cent of US agrochemical imports.
“Improved farm sentiment globally will drive up export revenue by 8–9 per cent this fiscal. However, domestic demand will feel the impact of excess rainfall causing crop damage, product returns and delayed field readiness,” said Anuj Sethi, Senior Director, Crisil Ratings. “With realisations stabilising after two years of sharp corrections, the overall growth outlook of 6–7 per cent remains more volume-driven than price-led,” Sethi added.
Stable Margins
Margins can remain stable thanks to steady realisations, benign raw-material prices and minimal impact from US tariffs. Modest capex and improved working-capital discipline will keep leverage in check, with debt-to-EBITDA likely to improve to around 1.3 times and interest coverage rising to 7 times. Domestic prices have also stabilised as China’s inventory overhang eases, with import realisations steady at around $5 per kg. Key risks include climate-related disruptions, regulatory tightening and currency volatility.
Operating Margins to Hold Steady
“Operating margins of agrochemical makers are expected to hold steady at 12.5–13.0 per cent, although still below the pre-pandemic peak of ~15 per cent,” said Poonam Upadhyay, Director, Crisil Ratings. She noted that a sharp correction in realisations last fiscal led to stability, which better operating leverage, softer input costs, and tighter cost controls support. As reported by alchempro.com, annual investments of around ₹5,500 crore in import substitution, new registrations and debottlenecking will continue. Steady cash accruals and disciplined working-capital management will keep borrowing needs low.
