Festive Season 2021: Agarbatti and incense industry looking at a Diwali boom

Although this is a daily use product in India, it was not deemed as essential by the government. (File)

By Goldy Nagdev

Undoubtedly, incense-based products have always been an essential part of all religious functions and households in India. The morning rituals in India hold the top bar including the burning of Chameli (Jasmine), or Chandan (Sandalwood) incense sticks. As a result, India has become one of the world’s largest producers of agarbatti and dhoop.

In the last few years, there has been a growth of 10-11 per cent in agarbatti’s (incense sticks) demand while dhoop witnessed a gradual growth but can expectedly grow at a rate of over 8% CAGR.

Government-Led Programs for Empowerment of Incense Industry

The government has also come forward to support this industry and announced several empowering programs. In turn, the Ministry of Micro, Small, and Medium Enterprises (MSME) has issued new guidelines to expand the reach and support of incense industry artisans and traders by focusing on the National Bamboo Mission. The MSME has put in all its efforts and plans to accomplish the support and empowerment through training and the provision of raw materials, as well as marketing and financial assistance.

How Did the Crisis Brought by Covid-19 Impact the Incense Industry?

The outbreak of the coronavirus pandemic also hit the incense industry like all other industries around the world. This led the incense industry to experience short-term hiccups in its overall demand and supply.

This hindered the incense industry and penetrated one of the major problems of a broken supply chain and logistics system. Another stumbling block is obtaining and procuring high-quality raw materials. This has recently become a giant source of concern jeopardizing the livelihoods of five lakh families if high-quality raw materials are not available on time.

Although this is a daily use product in India, it was not deemed as essential by the government. Hence, all manufacturing facilities had to be closed in compliance with local lockdowns. There were logistical issues. The shortage of raw materials exacerbated the problem. Small units also suffered reasons being the late payments and a shortage of liquidity in the market.

The onset of Festive Season to Hopefully Raise the Demand and Supply of Incense-Based Products

As the world is reopening and everything is getting back on track, the incense industry also appears to be recovering from the initial shock. The short-term hiccups experienced by this industry didn’t end its growth for too long, thanks to the upcoming festive season.

It is a strong belief that the consumption of incense products by Indians during the back-to-back festivals starting from monsoon to Diwali will increase by 30 percent to 40 percent. This is the time of the nationwide celebrations and prayers. There’s an anticipation that demand will remain stable throughout the holiday season. In turn, the incense workers and traders will keep themselves constant to meet demand and supply chain constraints. However, this will be the most difficult challenge. But the traders and artisans are carrying an optimistic behaviour towards addressing the supply chain issues. As the restrictions have been eased and there will be timely availability of the raw materials.

Conclusion

With the Coronavirus impact weaning off with the onset of Festive season, the incense industry has a lot of catching up to do. The increased demand in the festive season will help as a catalyst.  The fact that festivals are lined up at frequent intervals from August to March further gives an opportunity. There are a lot of other fancy or trendy fragrances like Camphor, Cinnamon, Pineapple, Cherry-Rose, and other innovative fragrances that are in high demand around the world.

(The author is Managing Director, Hari Darshan Sevashram Pvt. Ltd. Views expressed are personal and do not reflect the official position or policy of the Financial Express Online.)