The price war has percolated down to the domestic market as well. Prices are being drastically cut, specially on products that are been manufactured on a large scale. Newer products, however, continue to enjoy good price. The mushrooming of small-scale formulators and technical manufacturers of generic pesticides is cited as one of the reasons for price cutting.

Cypermethrin prices, for example, have fallen from a peak of Rs 1,400 per kg to Rs 510 per kg currently, within a span ofslightly over a year.

Part of the reason, according to experts in the industry, is the lifting of the ban on creation of additional capacity by the government in 1974. This has led to a mushrooming of small-scale manufacturers. These small-scall units, whose cost of production is very low, also enjoy excise duty exemptions. Currently there is a restriction on setting up additional capacities only in six pesticides, namely, aluminium phosphide, dimethoate, quinalphos, carbaryl, phorate and fenitrothion.

In spite of the fact that the country is able to produce high quality products, its realisation in the international market is much lower as compared to other exporting countries. According to Rajju Shroff, chairman and managing director of United Phosphorus, the largest producer of pesticides in the country, the Indian pesticide industry so far has not understood the correct method of globalisation. Most Indian players resort to exporting their pesticides to distributors in the importing country at acompetitive price which yields very low margins. Instead, if a brand name is established in a foreign country the realisation will be high and growth also could be higher. In case a brand name is established in a new country profits start pouring in only after the third year.

Shroff adds that a number of pesticide companies in India are planning to increase exports, but most of them depend entirely on agents and distributors who exploit the situation and internal competition between the Indian companies.

Though India has basically been an agrarian economy, consumption of pesticides has been very low as compared to other countries. Part of the reason is the poor state of affairs of farmers, who have little money to invest in crop protection. This was clearly exposed in the recent spate of suicides, which were mainly because of crop destruction by insects and other pests.

As per industry sources, India nearly 30 per cent of the potential food production is lost in the India due to insect pests, plantphthalogens, weeds, rodents, birds and in storage thereby necessiating the use of pesticides. The government mechanism of protecting the farmers has totally collapsed, due to complacency and corruption in the bureaucracy. The main gainer to benefit from all the government schemes launched has been the trader. However, there is a ray of hope for the pesticide industry in the form of crop protection insurance which the current government, has said, will be launched. This, industry sources say, could increase the use of pesticides by farmers. The pesticides industry in India is regulated by the Insecticides Act, 1968 and Insecticides Rules 1971 framed thereunder, which has been amended in 1972 and 1977. Domestic players have long been complaining about a step motherly treatment given to them by the government.

While multinationals are allowed to import certain pesticides, domestic manufacturers are not given permission to set up manufacturing capacities for the same products.

Till lately, the bulk ofproduction has been of insecticides, but now fungicides and herbicides are also catching up. Today, India is among the top 10 producers in the world and the largest among the south Asian and African countries, next only to Japan. In all 143 pesticides have been registered in the country (Annexure-`A'). Out of this, 66 technical grade pesticides are manufactured in the country. Various pesticides formulations produced in the country include dusts, wettable powders, emulsion concentrates, granules and encapsulations. Though India seems to be a big player in volume terms in rupee-terms the country accounts for less than 2.5 per cent (Rs 2,800 crore) of the world market of Rs 1,20,000 crore.The industry is expecting a more or less stagnant growth in volume terms in most major pesticides as can be seen from the table. However, growth is expected to come from the new generation pesticides as pests are normally getting immune to the older ones.