Growing at a CAGR of 7.1% Indian Seed Production is expected to reach USD 3.95 billion in FY 27

The Indian seed market is going from strength to strength in recent years. Currently, the market is sized at USD 2.8 billion, moving at a CAGR of 3.9% from FY 15 to FY 22, outperforming the global growth rate of 1.5%. Over the next 5 years, growth in the seed market is expected to take a further upturn and is expected to reach USD 3.95 billion, at a projected CAGR of 7.1%. 

The Indian seed industry has also been party to favorable policies in the past, which include R&D support, investment in the supply chain, and govt. sponsored promotion activities which have helped the industry to scale fast. The governing agencies including the Ministry the Agriculture in India understand the critical role high-yielding seeds will play in reducing gaps in food supplies, improving farmers’ income, and giving a positive flip to the agrarian economy. 

Meanwhile, farmers are also adopting the practice of using high-yielding crops in India rather than using the produce from the previous yields. This is also giving a strong push to the domestic market. 

Growth Drivers of Seed Market in India 

• Rising income and food demand: The Indian seed industry is pinned on strong underlying structural parameters such as a large population, growth in per capita income, and a rise in demand for various kinds of foods, beverages, grains, fruits & vegetables (f & v), oils, etc.
  
  
• Growth in Exports: India still holds a small share in the global export of seeds. However, with multiple climate zones and a strategic location, India can play a bigger role in exporting high-yielding seeds to Africa, Asia, and other destinations. 

• Technological Innovation: Innovations such as biotechnology, nanotechnology, and other technological advancements in breeding techniques will also help to foster growth.
  
  
• Cotton Seed Market: Cotton comprise17.5% of the Indian seed market. 90% of the Cottonseed used in India is BT Cotton. In case the ban on cottonseed import is lifted in African countries, Indian seed producers can play a pivotal role in international markets.
  
  
• The Maize Seed Market: The maize seed market in India is valued at USD 134 million in FY 22. In addition to food, maize is also used in biofertilizer, alcohol production, and poultry feeds, which is giving a positive impetus.  
  
  
• Active Private Sector Participation: Besides government-run enterprises and cooperatives, the seed market in India will also be dovetailed by private sector entities including private breeders, private R&D and marketing companies, and seed arms of agrochemical companies.
  
  
• Widening Farm Credit: As per the RBI data, the outstanding farm credit in India has grown by 10.2% Y/Y in February 2021, reaching USD 175 billion. This will further help farmers to switch to better yielding seeds.  

The Way Forward

India’s seed industry is poised to grow at an accelerated pace in the foreseeable future. The market ascent has plenty of potentials to further take off. A bullish agrarian sector coupled with the growing popularity of better yielding seeds will continue to drive the market in an upward direction. Meanwhile, the smaller size of the landholdings and the unorganized nature of agriculture can weigh on the growth and the governing agencies should adopt robust institutional support and concentrated policies to improve distribution and offer credit support to the farming communities. 

In addition to domestic demand, India can play a pivotal role in the export of seeds and join the league of other exporting nations such as France, Germany, the USA, the Netherland, etc. However, this will also require sound policy backing and incremental investments in infrastructure such as dry ports and supply chain facilities. 

Custom Seed Production, wherein the international parent company will provide seeds and the Indian manufacturer will produce and supply them back, could be a potent area to look into; provided better IP protection policies are enforced. Such seeds will also need an exemption from the registration process, stipulated under the Seed Act. 

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