Incense sticks: Exports of India's 'fragrant ambassador' dwindle steadily

Genuine agarbattis made in Mysore lie next to the spurious Karachi product: High costs and sharp trade practices cut into profitsAs a product immediately synonymous with the more exotic and mystical image of India, agarbattisor incense sticks have always found a ready and profitable market abroad. Not any longer. In fact, considering their product, the 100-oddagarbatti manufacturers who gathered in Bangalore for a seminar recently emanated anything but the sweet smell of success.Exports of India's "fragrant ambassador" have been dwindling steadily over the past four years and are woefully short of the projected export potential of Rs 7 crore. To add to the general air of gloom prevailing at the seminar were spiralling costs of production, cutthroat competition in the form of under-pricing and blatant brand imitation.Predicts B.S. Venkatesha Sastry president of the All India Agarbatti Manufacturers' Association: "If we don't take immediate action we will be faced with further falls in the export market."The single biggest contributor to the industry's dismal showing is an almost 800 per cent increase in the price of raw materials that has made the product uneconomical for manufacturers and unattractive to foreign customers. The price of sandalwood, the most important ingredient, has quadrupled from Rs 300 a kg three years ago to Rs 1,300 a kg this year. Then there is the problem of other raw materials like bamboo. This is basically a cottage industry employing more than 5 lakh people mainly women who "roll" the battis at home and sell it to manufacturers who perfume and package it, and then export it. There are slightly over 1,000 manufacturers in India and over 60 per cent of them are concentrated in Karnataka owing to its rich reserves of bamboo forests. Lately, however, the manufacturers have been forced to beg other states for their bamboo as Karnataka has been permitting very limited access to its forest resources.Spiralling Costs: But buying from other states involves getting government permission, a process that is long and cumbersome. Bamboo prices have also risen drastically, from Rs 1.50 a kg a year ago, to the present Rs 8 a kg. Prices of other ingredients have risen as steeply. Jigit powder, used as an adhesive, has become scarce to obtain and its price has doubled in the last two years.Resin has shot up from Rs 2 to Rs 11 per kg. Ironically enough, many of the blending materials used in agarbattis are costlier than in the international market even though they are produced in India.In the face of spiralling domestic costs, the international price of the product has remained stagnant. "We have been forced to qoute prices that are well beyond the reach of international buyers," says B.V. Rathnaiah Setty, a leading manufacturer and vice-chairman of Basic Chemicals Pharmaceuticals and Cosmetics Export Promotion Council (Chemexcil), an organisation that also deals with agarbatti exports. India exports mainly to Malaysia, Singapore, Thailand, West Germany, Canada, the US, Middle Eastern and West African countries. However, H.S. Rao of Aravinda Parimala Works, the country's leading exporter, feels that there are other less obvious causes for the steady decline of exports. According to him, certain companies have been dumping cheap imitations of well-known brands on the international market confusing the customers and eroding the reputation of Indian manufacturers. Because of deliberate underpricing by these fly-by-night outfits, says Setty, "unhealthy competition has sprung up".Growing Competition: Another dangerous trend is the export of raw agarbattis which are perfumeless and are imported by buyers, perfumed locally and then sold, thus reducing the dependency of the buyer on established Indian brands. Says Rao: "This has been affecting those markets where we were selling our finished products and we feel the Government must ban the export of raw agarbattis totally." The main target of the manufacturers ire is the International Society for Krishna Consciousness (Iskcon) in the US which started manufacturing its own agarbattis by importing raw ones from India and other countries. In fact, Indian exports to the US have dropped from around Rs 1 crore to a mere Rs 32 lakh.Chemexcil Chairman Dinesh Zavefi, however, feels that it is largely the manufacturers who are to blame because of their failure to study the US market and compete with existing brands. Their products, he feels, are shoddily packed with improperly sized sticks and lack of suitable fragrance. Their lack of international business tactics-promotional campaigns, product adaptation, communications and catering to varying tastes in different markets - is another reason, feels Zaveri, for their failure to fully exploit the potential markets that exist. Meanwhile, it is obvious that a combination of all these factors is ensuring that the profit potential of Indian agarbatti manufacturers is going up in smoke.Published By: AtMigration Published On: Nov 5, 2013 10:58 IST--- ENDS ---

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Incense sticks: Exports of India's 'fragrant ambassador' dwindle steadily

As a product immediately synonymous with the more exotic and mystical image of India, agarbattis or incense sticks have always found a ready and profitable market abroad. Not any longer.

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