Dutch companies develop special solutions for the Indian agricultural sector

Agriculture in India has faced major challenges for years, but climate change is only compounding the problems for Indian farmers. Can European technologies provide a solution or are they simply too expensive for the Indian agricultural sector? Dutch agricultural technology companies Omnivent and Incotec explain how they are advancing the Indian agricultural sector and making money in India.

Damage caused by climate change

India's agricultural sector is experiencing increasingly widespread adverse weather extremes such as prolonged drought, flooding and salinization of farmland. Late last year, heavy rains destroyed over 800,000 acres of agricultural and horticultural crops in the southern states of Tamil Nadu and Andhra Pradesh, while in the northern state of Kashmir, apple farmers saw their crops fail for the third year in a row due to early snowfall. Consequently, if global climate change continues at the same rate, crop yields in India are expected to drop by 30 percent.

Machinery, refrigeration, logistics & credits

Indian farmers also face a variety of systemic problems such as a lack of sophisticated machinery, difficulties in obtaining credit and logistical problems in marketing their produce. On average, 30-40% of the total crop is lost due to lack of cold storage facilities and/or refrigerated transport, which leads to lower income for the farmers. The Indian agricultural sector is in dire need of affordable solutions to all these problems.

Dutch companies develop special solutions for the Indian agricultural sector

Indian agriculture therefore offers great opportunities for European companies. There is a demand for knowledge that is abundant in Europe. The global specialist in agricultural storage technology, the Dutch company Omnivent, has therefore been active in the country since 2007.. The company began by giving workshops to arable farmers and other key players in the supply chain. "We talked to farmers about ways we could get the agricultural product to the end of storage in a good way," says Errol van Groenewoud, Omnivent's managing director. 

"This was not only useful for them, but also for our company. We learned a lot about the resources they had at their disposal and the farming methods used in India at meetings like this," says van Groenewoud. "We came to the conclusion that our European ventilation and storage products did not match the farmers' needs and that, if you want to capitalise on the growing demand for smart solutions, you have to develop low-threshold and efficient technology at minimal extra cost. We have therefore taken the simple fans that we sold in the Netherlands in the 60s and 70s for drying flower bulbs and adapted them to provide a good and affordable solution for Indian farmers facing high temperatures."

Developing products for India

Also The innovative seed enhancer Incotec soon after entering the market in India, came to the conclusion that while their seed enhancement technologies offered a great solution to the problems of local farmers, their prices were far too high for India. "To optimize our products for Indian crops and cultivation techniques, and especially to keep the price accessible, we decided to develop a product that was cheap for us to produce and that Indian farmers could apply to their seeds themselves," explains Erik-Jan Bartels, managing director of Incotec.

Market leader in India

Incotec is now the market leader in India in seed enhancement and sees a growing need among farmers for new technologies that can make farming methods more robust against climate change. "At the same time, a large proportion of Indian farmers still do not have the means to invest in innovative solutions, no matter how simple and cheap," says Bartels. "As a Dutch company, this should not stop you from taking the step to India. Indian agriculture must adapt to the major weather changes taking place there and although it will take at least a few more years before there is a real change, now is the time for companies to become active in India. India is a country where you have to invest time and energy before you can reap the benefits."

Take your time, it is worth it

"Doing business in India requires building good relationships with your customers," adds van Groenewoude. "So you have to take the time and have a local presence to be able to make that connection. Building a dedicated team in India that can fully focus on this is essential. If you stay at a distance and thus maintain a cold, businesslike relationship with your customers, you will never be successful in business in this country." 

Are you curious about the opportunities the Indian agricultural sector offers for innovative, European companies? Our sector analysis provides a comprehensive overview of key market statistics and growth prospects.

Did you know that India is the fastest growing agricultural machinery market in the world? 

Indian R&D division worth gold to NXP Semiconductors

Chip producer from Brabant, NXP, has grown into one of the largest chip producers in the world with a turnover of 11.1 billion dollars. “NXP’s operation in India plays a big part in that”, says Vice President of NXP, Sanjay Gupta. “We have 650 patents to our name.” 

Sanjay Gupta (in blue) during the NXP India Mentorship Program

Largest R&D hub 

NXP has 4 R&D offices in India. More than 3000 people work there in total. The various locations focus on specific markets. In Noida, near capital Delhi, they design hardware and software used in the next generation of microcontrollers and microprocessors for the automotive and edge computing industries, in Bengaluru they focus on the IoT and security markets, in Pune on connectivity solutions and in Hyderabad on software solutions for the communications and infrastructure market. "India is NXP's largest R&D hub," Gupta says. "And is also considered one of the most innovative hubs. We have so far been able to add more than 650 patents from India to NXP's already impressive list of patent families." This, according to Gupta, once again underlines the quality of Indian engineers.

Business culture in India

Gupta himself was an engineer from a leading university in India. "Twenty-six years ago, as a recent graduate, I was offered a job with this great organisation. I was fortunate to have multiple opportunities to grow and excel within this global company and was guided and supported by the management of NXP every step of the way, from one challenging role to another. In 2016, I was given the most challenging opportunity to lead NXP India, while the company merged with US semiconductor maker Freescale. Examples like my career within NXP are a huge motivator for our people: they know that truly everyone has the opportunity to develop within the company." 

NXP's Senior Leadership Team is actively working to create a family culture across all sites. "This is also good for the business," says Gupta. "Despite the fact that our teams in India are literally miles apart and focus on different products and markets, we encourage collaboration between departments as much as possible. We find that when we bring different disciplines together, they learn incredibly well from each other and often come up with new ideas or solutions for their own segment."

Ease of doing business

According to the India vice-president, companies who are still unsure whether India is the right location for their R&D department should make a move now. "There is a lot of talent in India and you don't have to worry as a company about the quality they can deliver. Moreover, doing business in India is becoming easier; just look at the enormous leap India has made in the past five years on the World Bank's Ease of Doing Business list. In addition, the government is investing heavily in the development of industries such as manufacturing and the chip industry. No wonder India is becoming increasingly popular with foreign investors."

Read more about the benefits of outsourcing your R&D to India and why now is the right time:

Tax benefits

The Indian government has announced in the 2022 budget to extend the tax benefits applicable to international companies setting up a manufacturing plant in India. In addition, major investments will be made in the chip industry, the automotive industry and infrastructure. According to Gupta, this offers interesting opportunities for European companies. "If you want to successfully enter the market in India, you need a long-term vision. Therefore, you should not only consider setting up your R&D here, but also explore the production possibilities. That way you can take advantage of the current incentives and be agile and prepared to respond to the rapid developments in Indian society."

Competition increases

Gupta is not worried about the potential competition for NXP now coming to India due to the favourable business environment. "First of all, I think competition is healthy for any company because it makes you more focused and efficient. In addition, we at NXP are so versatile, we work with talented people and the markets in which we operate are developing so rapidly that I expect us to increase our sales significantly in the next five years. Take for example the automotive industry, one of our key markets. We are currently working on exciting innovations and solutions for electric vehicles, infotainment & connected cars and autonomous vehicles, with a focus on improving the customer experience. This sector will continue to evolve in the coming years."

India is at a turning point

The MD admits that these advanced technologies may not yet be 100 per cent suited to the current needs of the Indian consumer. "But make no mistake, India has a population of over 1.4 billion, half of whom are under 35 years of age. This rapidly developing country has a growing middle class and rising income levels, creating huge business opportunities for international companies if they dare to seize the chance to invest in India and be part of this journey. India is known for embracing new technologies and solutions at an exponential rate, once they are at an affordable level. For instance, India is the largest two-wheeler country in the world. Every year, more than 20 million motorbikes and scooters are produced for the Indian market. The number of Internet users is also a good example. It has increased by 800 per cent in 10 years. Paying or shopping online was very unusual just a few years ago and now it has become commonplace. India is at an interesting turning point that companies should take advantage of." 

Market entry workshop

To become truly successful in India and take advantage of the opportunities described by Sanjay Gupta, a solid market entry strategy is required. India is a market that requires a long view and a good understanding of local needs and preferences. To make sure you start with the right strategy, IndiaConnected has set up a special Market Entry Workshop.

In 2 hours you will discuss your strategy with our experts and the following topics will be covered:

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Seed enhancer Incotec launches India-focused product to conquer market

The innovative seed enhancer Incotec has been active in India since 1995. The big question at their market entry in India: how do we sell our solution, which is expensive by Indian standards, to the farmers there? expensive solution to the farmers there? The answer turned out to be a product specially developed for the Indian market. "It is still our top seller," says Erik-Jan Bartels, managing director of Incotec.

Managing director of Incotec Europe Erik-Jan Bartels

Incotec coated seeds

No genetic engineering

"When people think of seed improvement, they quickly think of genetic modification of the characteristics of the seed, or breeding, but that is not what Incotec does," explains Bartels. "With our technologies, we improve the seeds without altering the plant's DNA. For example, we put a special layer, a coating, on the seeds so that they become nicely rounded and can be sown more easily with a machine, without breaking." But Incotec's key technology goes one step further. "We can make sure that all the seeds germinate at the same time and the crop also comes up in one go. That can give a farmer a lot of extra income in a harvest, but it does come at a price." 

In India, you cannot have a product that is geared towards Europe 

In India, Incotec is focusing on a simpler product. "We have developed seed coatings especially for the Indian market, which not only fully meet local requirements in terms of properties and price, but can also be applied to the seed by the seed companies themselves," Bartels explains. "That is not only the first product with which we made our market entry, but it is also still one of our top sellers." Incotec arrived in India as early as 1995. The company placed an advertisement about its innovative solutions in an Indian agricultural magazine and shortly afterwards they received a fax about it. A student of Plant Breeding and Genetics at the University of Gujarat saw the potential of Incotec's products in the untapped Indian market. "This student, Manish Patel, became our first importer in India and has now been Incotec's Managing Director for 17 years. He embarked on the adventure with us from the very beginning, in the first years by trial and error," says the Dutch foreman.  

While exploring the market with Patel, Incotec immediately found that even their simplest European products were still far above the budget of Indian farmers. "Producing in India was really not an option for us at that time," says Bartels. "We wanted to prevent our techniques and recipes from leaking abroad. So we first started exporting the coating developed in the Netherlands for the Indian market. That was manageable in the first few years, because our sales came on very steadily. But as soon as Incotec became better known among the large Indian seed companies, the number of orders suddenly came flooding in, and it was time to take a closer look at the way we work.

Made in India builds trust in your product

"When you're growing so fast you want to be able to respond to customer needs easily and quickly, and that's only possible if you're close to the market," says the managing director. "So we decided to set up a production facility anyway, even though we were a bit apprehensive about whether we could protect our techniques that way." Incotec therefore starts small, mixing the coating concentrate in the Netherlands and adding Indian raw materials in India and bringing the solution to the right concentration. "That felt very safe, because in India nobody knew what was in the Dutch mixture and on the basis of the raw materials there was no possibility of reverse engineering," says Bartels. "It did make a huge difference to our sales. In India, the customer likes it when you are Made in India and for us it also meant a considerable reduction in production costs."

Intellectual property protection in India has improved tremendously

The success of the seed coatings also led to demand for other Incotec technologies. "To serve the customer in India even better, to optimize our products to the crops and cultivation techniques in India, and to achieve further cost savings, we decided to move a larger part of the production to India," Bartels says. To protect the intellectual property rights of its special technologies, Incotec did not go the traditional route of applying for patents. "Not because this is poorly regulated in India - the protection of intellectual property in India has improved enormously in recent years - but because we have developed our own system for this," explains the MD. "The secret of the blacksmith still remains within the walls of the company."

Within Incotec, very few people know exactly how the products are manufactured or the techniques applied. "We work in all our branches worldwide 'on a need to know only basis'," says Bartels. "That means that each link in the process has only the knowledge they need to do their job. So the purchasing department knows what they have to buy, but not exactly what happens to those ingredients afterwards. In the factories, our people know what they have to do and also what the possible risks are of the substances they work with, but not exactly what the final product does. We also work with internal codes, so that outsiders cannot find out exactly what is in our products. It is similar to the way popular soft drink brands work. It tastes exactly the same in every country in the world, but the exact recipe and the details of the process are only known to a few."

The reforms will give the Indian farmer more money for innovative solutions

Incotec is the market leader in seed enhancement not only globally, but also in India. Yet many farmers in the country do not yet have the means to invest in the company's innovative solutions. "The agricultural sector in India has grown further mechanised in the time we have been active there, but is still far from being at the European level," says Bartels. "But we are now seeing two developments. On the one hand, India has to deal with climate change, which means that the start of the monsoon is shifting and the country is faced with greater weather extremes, such as longer periods of drought, but also more heavy rainfall. Agriculture must adapt to this. Seed companies and farmers would therefore like to invest in new technologies, but these are currently too expensive. On the other hand, the Indian government is implementing major reforms in the agricultural sector. Despite the fact that the Dutch top executive does not expect the sector to start a 'double digit growth' overnight, he does think that these reforms could have a positive impact on the farmers' income. "The reforms could lead to more choice and higher returns for farmers, giving them more money for innovative solutions. If these reforms also lead to an increase in scale within agriculture, agri will certainly be a sector to keep an eye on in the coming years."

Special webinar for successful sales in India

In February, we are organising India Business Month, during which you can attend free online sessions with all kinds of experts on doing business in India. On 9 February, the session is dedicated to selling goods and services in India. Oliver Mirza, Managing Director of Dr Oetker in India, will share his experiences on how the famous food brand had to adapt its products to the Indian market to become successful.