The Incense Stick industry in India was duly affected by the Covid-19 pandemic which severely hampered businesses worldwide in 2020, industry faced little demand contraction and also production was impacted as factories were closed during the nationwide lockdown and during the second wave of the COVID-19 pandemic, but the industry was able to bounce back at even higher pace where it use to traditionally grow at CAGR of 3.6%, its now witnessing double digit growth.
The growth was build on rising exports -
As per the information from All India Agarbathi Manufacturers’ Association (AIAMA) the apex body for 800 Agarbatti manufacturers around the country, India exports incense sticks to over 150 countries and the industry is pegged at INR 8,500 Cr of which exports account for INR 1,000 Cr. The Export Promotion Council for Handicrafts (EPCH) said that India annually exports sticks worth about more than INR 450 CR to Europe.
The Apex body mentioned that they are seeing a surge in demand for agarbathis from all over the world and U.S., U.K., Malaysia, and Nigeria are among the top four importers of our products. The demand growth from all over the world is being seen due to the new and diverse usage of incense sticks. The emerging trends in aroma and fragrances are inclined towards oriental, floral and cosmetic notes, such as aqua, lavender, oudh, mogra, rose, champa, lavender, lemon and citronella essential oils.
Government efforts also helped to grow exports.
In 2019 Indian incense sticks exporters faced a huge problem when customs from Italy seized the incense stick alleging that the product contains harmful chemicals beyond a permissible limit. Thanks to swift action by the commerce and industry ministry the issue was resolved quickly and Alerts concerning Indian incense sticks have been removed by the European Union's Rapid Alert System (RAPEX) database.
RAPEX is a rapid alert system for dangerous non-food products that permits the member countries to exchange information on those goods posing a risk to health and safety of consumers and measures taken to do away with that risk
It was suggested to Indian Incense sticks exporters that they use appropriate labelling while exporting to EU. The label should discourage the frequent use of the product while recommending proper ventilation of the room in which combustion takes place.
How will India beat its competition like China and Vietnam?
The incense industry was facing problem from countries like China and Vietnam as they have modern machinery as compared to India and also facing a problem of manufacturers opting for Agarbattis made in china. Therefore the government put curbs on imports of agarbatti and other similar products amid reports of significant increase in inbound shipments from countries like China and Vietnam. This decision will lead to promotion of domestic manufacturing of these incense sticks at large scale. And to promote upgradation to modern machinery, the Union Budget 2021, the government earmarked Rs 15,700 crore for the development of this sector. The government is also planning to become self reliant in this sector by increasing farming of agarwoods, so that India can stop importing agarwoods from other countries. The Global trade of agarwood chips and its products is estimated at about $30 billion. The ministry of micro, small and medium enterprises estimates the size of the Indian Fragrances and flavours industry at around $500 million which is growing at 11% per annum while the global fragrance and flavor industry is valued at around $24 billion. It is promising for India as even when raw incense was imported, 85 percent value addition was done in India.