Written by Dr. Karan Garg and Anwin Thomas K

State Government of Tripura has taken various farmer friendly initiatives to promote sustainable Agarwood Cultivation and Trade as a means to bring in Economic Growth and Employment Generation in the State.

Tripura and Agarwood

Agarwood is a tree which produces, one of the most expensive natural fragrances –Oud, it is often called as Liquid Gold in the global fragrance industry.  Agarwood is processed into perfumes, incenses, and ornamental displays and used as a raw material in traditional and modern medicines. Agarwood has been cultivated in India for centuries and traded throughout the world, especially in Middle Eastern & East Asian Countries. North East India has been historically the cradle of Agarwood cultivation and Tripura has a long history of Agarwood, with Agartala, the capital of Tripura, is believed to have derived its name from Agarwood.

Oud – the ‘liquid’ gold in Fragrance Industry

Agarwood is valued in across the world as a precious aromatic resource, Premium Oud fetches over $100’000 or Rs. 80 Lakh per kg in the international markets. It is considered as the most premium of perfumes by connoisseurs – giving it the name of liquid gold in the market. The Agarwood tree, when naturally or artificially inoculated produces Oud – the product used in perfumery. Agarwood is also restricted by various International and National regulations – which makes the commodity even rarer and harder to produce and sell. Agarwood brings in lucrative income for those who produce, add value and trade.

Agarwood’s – diverse benefits and applications  

Oud Oil and Oud Wood (derived from Agarwood) is extensively used in luxury fragrances, it has a musky fragrance, it is mostly considered as a Middle Eastern fragrance and is widely used in Body Mists, Attars, Perfumes and Colognes.

Agarwood has multiple other uses- its byproducts are used as a treatment for a variety of skin diseases and disorders. Ayurveda, East Asian and Chinese Medicine uses Agarwood products for its medicinal uses.  Oud Oil is used in Aromatherapy, as diffuser oils to scent, uplift and lighten the surroundings with the musky, sensual overtones. Enriched with antibacterial components, it helps to remove bacteria from the skin, treat and reduce the appearance of dark spots, and fight fungal infections. Agarwood is further processed into and ornamental displays, bracelets, tea etc.

Benefits of Agarwood for Tripura – for people and economy

Agarwood cultivation, processing and trading boasts numerous advantages. It brings in lucrative income to farmers, creates employment through processing and value addition and generates revenue for the Government.

This crop can thrive with minimal spacing, even as close as one foot apart, optimizing land usage – it can be cultivated with other crops. Tripura has over 1.2 Crore Agarwood trees at present, and Tripura’s climate and geography is suited for Agarwood cultivation. Globally Agarwood Market is in billions of dollars and is expanding rapidly; as Demand for Plant-Based Aromatic products are increasing globally. Demand significantly outweighs supply in the market. Agarwood Cultivation in Tripura is set to significantly contribute to the States Economy, benefitting people.

Challenges in Agarwood Sector in Tripura

Even thou Agarwood is a lucrative option for the state, multiple Policy and Legal deadlocks prevented the sector from having any growth for decades. During these lost decades, players from Vietnam, Malaysia and Thailand took a large slice of the international market.

From 2018, the sector had a paradigm shift as the State Government of Tripura, with the support of Central Government has under-taken development of the sector on a priority basis and has been consistently working to promote sustainable Agarwood Cultivation in the State.

Tripura Government has emphasised on the potential of agarwood to create a wave of economic revolution in Tripura. Due to indiscriminate felling of Agarwood Trees across the world international environmental restrictions like CITES were imposed on the sector, Government of India also strictly regulates agarwood trade and licenses are sparingly issued. To prevent environmental harm and promote responsible cultivation – Tripura Government policies are innovatively made to balance out environmental concerns while promoting support for the sector.  

Tripura’s Government Initiatives to improve Agarwood Industry

Tripura Government made a white paper – Tripura Agarwood Policy 2021, which sets out multiple innovative solutions based on international best practices to nurture growth of the sector. The target is to develop a Rs. 2000 Crore agarwood-based economy by 2025.

This Policy ensures that maximum value addition of Agarwood happens within Tripura, and the full processing of Agarwood till retail branding is done within the state. Government has taken initiatives to promote investments into the Agarwood sector – by initiating policies which enhances ease of doing business in the sector.   

As Agarwood trade requires various complex licenses and certificates, Tripura Government has set-out a plan to make a single window portal for stakeholders to make it easy to get licenses to cultivate and CTIES, LPC and other government certificates would be given out to buyers to make international trade of Tripura oud possible.

Government has also encouraged farmers to cultivate Agarwood, and has made multiple trade shows where farmers, processing units can meet buyers thereby ensuring the best competitive prices for farmers in the State. Tripura Government has taken various initiatives to connect its Agarwood sector to international markets, from 2021 – International Agarwood Buyer-Seller meets have been held.

In the latest Meet (in 2023) – the Government has received investment proposals of Rs. 1600 Crores from various international and domestic players. Major FMCG companies – Patanjali, Dabur and Imami has expressed interest in Agarwood sector of Tripura. The event was a massive success with Tripura being in the spotlight for global fragrance players who are looking to purchase the state’s product. 120 Representatives from foreign countries attended the meet.

Way Forward

The actions taken by Tripura Government is set to establish the state as a leading player in the Global Luxury Fragrance Industry. This would lead to economic development and employment generation in the State. The Policies taken by the Tripura Government aligns and supports Central Government’s wider plan of making North Eastern region an Economic powerhouse.  Prime Minister Shri. Narendra Modi has emphasised “Northeast is our gateway to South-East Asia and can become a centre for development of the entire region.” Agarwood could accelerate Tripura’s growth, brining prosperity to wider region. Tripura Governments initiatives to nurture this industry is commendable.

Authors-

Dr. Karan Garg is the Managing Director, TLGS Consulting Group. Dr. Garg has advised Private Sector Entities, NGO’s and Government Authorities on various developmental projects and public initiatives in North Easten Region.  He has mentored and supported budding entrepreneurs from North East through his not-for profit initiative House of Startups India. He is a trusted advisor to Businesses, Public Sector and Government entities across India and abroad.

Previously he served as the Registrar, Supreme Court of India and as a Judge in the Judiciary of Punjab and Haryana. He is an entrepreneur with ventures in Defence (BSA Bharat), Regulatory & Business Consulting (TLGS Consulting Group) and Law (TLGS Legal LLP) among others. He is a trained lawyer from National Law Institute University, attended Harvard Law School to study Mergers & Acquisitions and International Trade Laws.

Mr. Anwin Thomas K is currently a Manager at TLGS Consulting Group, and is a lawyer who graduated from the Tamil Nadu National Law University, in Tiruchirappalli.