Exporting / Importing Incense Sticks (Agarbatti)...........
HS Code : 33074100
While the agarbatti industry is perceived to be a small cottage industry, export figures speak a different story. Despite tough competition from China and Vietnam, India has managed to dominate the market with its premium quality incense sticks.
Whether it is for religious purposes, medicinal value or simply for its pleasant fragrance, agarbatti is a product found across almost every Indian home. Today, the Indian market is flooded with agarbattis [also known as joss stick in China or incense stick in other countries] of various colours, fragrances and qualities. But, the market for agarbatti is not by any means limited to India. People across the globe, whether they be in US or UK, Malaysia or Ethiopia enjoy agarbatti as much as Indians do – opening up a global market for exporters.
Agarbatti, mostly a handmade product [in India], is exported to almost the entire known world from India. While many countries are known for selling unscented or raw incense sticks, India is known for its perfumed versions.
In India, a wide variety of agarbattis are available in different shapes, colours and fragrances at very competitive prices, from sandalwood to lavender, and rose to mogra. Buyers are practically spoilt for choice. Adding to the brag-bucket is the fact that India-made agarbattis are considered to be one of the best in the world – no wonder, we enjoy such a vast customer-base across the globe. So, how attractive is the market?
The contribution of agarbatti to India’s exports business may not have attracted much attention as it accounts for a mere 0.04% of India’s total exports. But a deeper look at the numbers tells a story of a niche export product with tremendous potential. This product has seen a steady demand in overseas markets, irrespective of economic or political climate.
As per Ministry of Commerce, GoI data, between FY2012 and FY2016, India exported agarbattis worth $498.02 million – which considering that it is a part of the labour-intensive cottage industry is a commendable figure. In addition, annual exports witnessed an 11.57% growth during the same period, from $89.64 million in FY2012 to $100.02 million in FY2016. Today, India exports agarbatti to more than 160 countries including US, Nigeria, Malaysia and UK. In FY2016, US was the largest importer of incense sticks from India with an import value of $11.3 million, followed by UAE at $6.23 million and Nigeria at $5.85 million.
"Indian incense is exported to nearly 160 countries"
But at the same time many indians also import incense sticks from Vieatnam
Earlier, Indian agarbatti was cheaper by Rs.10-12 per bundle than the Vietnamese agarbatti so nobody was using agarbatti from Vietnam. Presently the rate differences is only Rs.2-5. The number of agarbattis in a pack is also more in the Vietnamese product. The Indian-made incense stick is slightly heavier so we have fewer sticks in a pack. Even if we give the same numbers of sticks as the Vietnamese product, the local buyers here will not buy Indian agarbatti as they perceive that an imported product will be of better quality while being cheaper than an India-made product is an view point of an importer but...
But fregrance of Indian Agarbatti lasts long, no one can beat us in quality
Incense or agarbatti is available in different shapes such as sticks, cones and coils. In terms
of fragrances, one can find varieties from sandalwood to apple and even chocolate.
One reason for losing marketshare to importers could be that the industry hasn’t changed much to date. Agarbatti is traditionally made by hand – by rolling bamboo sticks in an incense paste or a dough made of various ingredients, and is a labour intensive industry. Of late, some companies have started to employ machines to beat the tough competition from Chinese exporters, who mostly market machine-made agarbattis. But that it seems is mostly for domestic consumption
If there is any production of machine-made agarbattis, it would be for the domestic market. The demand for the handmade variety in the international market is high as the quality of handmade products are better than that of machine-made ones
Exporters have always been able to find new markets, which have helped them stay afloat in the business. Many countries have started importing incense sticks from India over the last few years – while the numbers from countries like Iraq and Netherlands may be small, they are on the rise
The demand is steady from our main markets such as UK, US and Latin America. Alongside, some new markets in Africa are opening up, which is good for the industry. This is mostly because of growing influence of ayurveda, yoga, khadi, Indian culture, and more.
Indian agarbatti manufacturers are also exploring a melange of innovative scents, from strawberry to green apple and even chocolate.
Although, a majority of the Merchant Exporter source raw materials locally, the trend of procuring them from other countries is growing. Ministry of Commerce (GoI) figures reveal that in FY2016, India’s imports of agarbattis from Vietnam was $60.12 million
As far as profit margins are concerned, while a lot depends on the destination and quality, export margins vary between 5% and 20% in Exports or Import market condition
As long as mankind continues to pray to the divine, the product will continue to be a profit-spinner around the world!
There is no big difference in quality between products made for domestic and international markets. But then, different regions have different fragrance preferences. For instance, Middle East prefers bakhoor and more oriental type of fragrances, while France demands lavender and floral fragrances. And customers from South America favour sandal and cedar wood. Also, the demand for fragrance changes with the season. Again different countries prefer different styles of packaging. In Middle East, packaging in bright and bold colours is preferred, whereas customers in France and South America favour more subtle and young colours. Agarbatti has been classified as a handicraft item and that is beneficial
This is a consistent business. Besides, Indian agarbatti industry has created a benchmark which makes it difficult for other countries to compete with us. For the record, even countries like China and Vietnam cannot compete with India when it comes to quality. Further, India has been exporting agarbatti for the last few centuries now, and I think the industry will keep growing at a steady pace in the future as well.