The Indian seed industry is the fifth largest seed market in the world, accounting for 4.4% of global seed market after the U.S. (27%), China (20%), France (8%) and Brazil (6%). In terms of global trade, India is almost self-sufficient in flower, fruits and vegetables and field crops seeds. According to NSAI, the market size of Indian seed is expected to grow at a moderate rate till FY16 on account of favorable global grain supply demand fundamentals, grain productivity well below world's major grain producing regions and government's continued focus on improving seed replacement rate. Despite improved demand and favorable crop economics, EBITDA margins of most domestic seed companies declined in FY13 on y-o-y basis. Increase in competition intensity and maturation of growing cotton seed market were the major factors led this drop. Going ahead, seed industry top-line is expected to continue to witness positive demand trend in FY14, but margin may remain under pressure. Over the long-term, companies are targeting to increase the market share in higher margin seed products such as fruits & vegetables and introduction of innovative products which improve the crops yield.
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