Unlocking the aromatic wealth: Tripura’s strides towards Rs 20 billion Agarwood industry

Agar, the Wood of the Gods

Agarwood, known as oud, is the world’s most commercially valuable plant. It has been the most-priced wood for millennials and fetches up to USD 100,000 per kilogram (Debnath, Saha, 2022). 

Agarwood is traded as wood, chips, powder, or oil and widely used in incense, perfumes, and medicine for its distinct fragrance and medical properties. It’s seen as a symbol of high status, wealth, and prosperity with massive demand in Middle Eastern countries and East Asian Countries (China, Taiwan, Japan, South Korea, and Hong Kong) (Jim, 2015). 

Agarwood is derived from the Aquilaria Malaccensis tree grown in Bangladesh, Bhutan, Indonesia, Iran, Malaysia, Myanmar, Philippines Singapore, Thailand, and India (especially in Northeast India). The global agarwood chips market is valued at USD 44 Billion this year. With an estimated CAGR of 7.1%, the market is estimated to be valued at a staggering USD 87.5 Billion by the end of 2033 (Persistent Market Research, 2023).
 
Agartala, the capital of Tripura, is believed to have derived its name from Agarwood and North Tripura district is home to 1.13 Cr Agar trees. The edaphic factor of Tripura is conducive to the growth of Agar Trees which requires minimum input intervention and allows intercropping adaptation. With an estimated annual profit of INR 20 Lakh per hectare, the sector promises to create a wave of economic revolution in Tripura.  

Also Read: Assam Cabinet gives nod to state Wood-based Industries Promotional and Development Rules 2022

What kills it makes it “stronger”

The wood from a healthy Agar tree is odourless and valueless. However, once wounded through external forces, a stress-induced aromatic resin called aloes embeds itself into the heartwood to create valuable agarwood. In its natural environment, only 7 to 10 per cent of the Aquilaria trees get infected to produce agarwood (Buchanan, 2021). Thus, to stimulate agarwood production artificial fungal inoculation techniques have been developed over the years. 

Irresistible to its fault

To identify trees containing agarwood, it is essential to split them. This resulted in the indiscriminate felling of agar trees causing a decline of over 80% in the past 150 years (IUCN, 2018).  Hence, it was included in Appendix II of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). The EXIM policy (2009-2014) by the Directorate General of Foreign Trade allowed export subject to the production of a certificate of legal possession issued by the competent authority.

Later, to regulate and promote trade and investments in agarwood-based industries, Tripura launched the Tripura Agarwood Policy, in 2021, following Assam which launched the Assam Agarwood Promotion Policy, 2020. 

The path laid out

The Tripura Agarwood Policy sets a target of developing an annual INR 2,000 Crores agarwood economy by 2025 alongside 2,000-hectare coverage of agarwood plantations. The policy suggests mapping and cultivation of agar trees, training on drilling, cutting, chip making, and oil extraction, inoculation techniques, value addition and marketing. An Agarwood Trade and Research Centre is envisioned to provide a platform for local growers and a one-stop solution for registered buyers and sellers to get legal documents from CITES. 

The policy has opened multiple investment opportunities including contract farming, the raising of plantations on a lease basis, research, development, and deployment of agar inoculation, the establishment of agar oil/ chips processing units, development of planting materials, nurseries, and financial instruments for agar-growers and business units.

Treading with Caution 

The policy also places checks and balances to avoid indiscriminate felling of trees and ensures due price for local growers. The growers are encouraged to register trees on their private land for a certificate of origin, a prerequisite for felling and transit of agarwood. Similarly, traders need to obtain a Legal Procurement Certificate (LPC) from the District Forest Officer supplemented by Approval from the Wildlife Crime Control Bureau, Government of India in case the Agarwood derivatives need to be exported. 

As extensive diktats often dissuade traders from entering formal markets, the Tripura government collaborates with Central ministries to streamline processes for growers, unit holders and exporters of Agarwood. After multiple engagements with the Ministry of Environment, Forest, and Climate Change for clearance of pending CITES approvals, the year 2023 saw the export of the first consignment of Agarwood Chips from Tripura. This feat is only the stepping stone towards making Tripura a Global Hub for Agarwood. 

Key steps taken: 

The Tripura Government is proactively working towards enhancing the supply chain capabilities in the Agar Sector. Van Mitras trained by the Forest Department are tasked with enumerating the Agar trees. Simultaneously through the “Ghar Ghar Agar, Har Ghar Agar” campaign, the department is developing private plantations benefitting thousands of beneficiaries. This campaign is also creating awareness of the potential value of agar plantations while encouraging intercropping for interim returns, artificial inoculation and the registration of trees in private plantations. 

The NTFP Centre of Excellence is also spearheading research on inoculation and planting materials and has collaborated with the Fragrance and Flavour Development Centre to launch the Tri Agar Brand. The brand sets a benchmark for potential entrepreneurs to develop niche products from agarwood. Further, the state would train the local youth on agarwood chip production and SHGs on agarwood incense sticks production in the coming months. 

Way forward: 

Moving forward, it is highly important to streamline, automate and time-bound the process for registration of Agarwood trees and obtaining industrial licenses. Ensuring a Single Window Clearance System to improve the ease of doing business in the sector would boost investments and formal trade. 
 
Testing laboratories (accredited to NABL) must be established to ensure fixed grade-based pricing. Further, capacity building of the local sellers in branding, packaging and marketing through workshops is essential for better presentability of the luxury products. There is a need to explore trade potential through dialogue with industries and embassies.  

While the export of Agarwood oil and chips is regulated, value-added products such as agarwood perfumes, incense sticks, beverages with medicinal properties, and pharmaceutical and cosmetic products involve no regulation. This allows immediate tapping of global markets. 
The Government may initiate toxicology testing and certification as the first step. 

It is important to tap efficiently, endemic resources while respecting the ecologically sensitive nature of the region. Striking such a balance requires extensive collaborations between the central ministries and the state governments and between the government, academia, and industries. 

The Tripura government has been organizing India’s biggest annual event in the agarwood sector- The International Buyer Seller Meet of Agarwood Products- since 2021 to build synergies with key stakeholders for promoting trade and investment in the sector. 

The third edition of the event will be organised from 5-7th of October 2023 in Agartala. With all guns blazing Tripura is set to soon create a global benchmark in the Agarwood Sector.