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The burning of incense in religious and social functions has been practised in India since early times. Hindu practice of offering prayers in temples and other places of worship,Dhup an aromatic powder or paste is burnt in Indian homes as a fragrant fumigant and is reputed to possess insecticidal and antiseptic properties. Agarbattis are obtainable in different colors and with different perfumes.The demand in internationalmarket is ever increasing and exported to almost to every country in the world. The burning time ;of an agarbatti varies from 15 minutes to 3 hours according to quality and size. About 75% of the agarbattis manufactured are of cheap quality containing only charcoal powder or low quality sandal wood powder with a mixture of 50% of “wood gun” powder.
Cheap perfumes are used to give them a top note. In superior varieties, essential oils, purified resins, natural fixatives like amber, musk and civet are used along with synthetic aromatics. Absolutes are use in the costlier types. The origin of agarbathi-making as a cottage industry can be traced to Thanjavur region of Tamil Nadu from where it spread to the neighbouring state of Karnataka, which currently is the largest producer in India, and to a lesser extent to Andhra Pradesh, Gujarat and Bihar. Besides providing employment to unskilled women and children, in recent years, agarbathi has increasingly become a significant foreign exchange earner for the country. Under the liberal economic policies of the Government, the agarbathi industry has potential to expand its global market. Trade and marketing set up
Agarbathi industry is gradually developing a wider base. Of the total domestic sales of Rs 7.1 billion (approx. US$ 198 million) in South India accounted for 35%, West 30%, North 18% and East 17%. Almost two-thirds of consumption took place in rural areas (61.23%).Rising demand for the products and earning of hard currency has led the agarbathi industry to orient itself increasingly towards exports. Total exports have increased by 266%, from Rs 1.5 billion (approx. US$ 42 million) in 1989-90 to Rs 4 billion (approx. US$ ll2 million) in 1993-94. More than 800 registered and 3000 unregistered units currently exist in the country and only up to 10% of these, mostly in Karnataka, are engaged in export trade. Market size
There are 400 exporters in India who together export Agarbatti (or incense sticks) worth Rs.800 crores. Of late multinational companies have introduced machine made agarbatti for the India market. As a result all other leading Indian manufacturers are using machine made round bamboo sticks for making agarbatti The size of the dhoop market is Rs 200 crore, of the total agarbatti market of Rs 1,100 crore. Size of the organised market is about 40 per cent of the total market of agarbathi . The biggest export market, according to the Managing Partner was the US followed by a rapidly growing demand in LATAM countries such as Brazil, Peru and Argentina. Small units numbering over 10,000 operate in different parts of the country and the industry turnover has been estimated at over Rs. 1,000 crores, providing employment to over 12 lakh people, directly and indirectly.
After liberalisation many MNCs have ventured into this sector. fact, many of the agarbathi manufacturers are regional players with limited resources who cannot counter the big companies. Of the around 20 small and medium agarbathi manufacturers in the country, One of the prime reasons for the MNCs to enter this sector was that the agarbathi industry has been growing at an average rate of 10 per cent annum, whereas the growth in consumer durables was either stagnant or growth. “Agarbathi is a fast-moving product with a good shelf life. The demand has been growing by around 20 per cent in northern, eastern and western States.” Further, the demand for agarbathi and other products had gone up worldwide with increasing awareness on Indian spirituality and growing popularity of aroma therapy, especially among the youth. India’s agarbathi exports touched Rs. 300 crores. The product was being exported to other countries like West Asia, Africa, Europe and Southeast Asia. China was emerging as a big market as well as a competitor,
RAW MATERIALS AND SOURCES
The major raw materials used in the agarbathi industry are bamboo, wood charcoal and processed perfumes. Moreover, since families are contracted and agarbathi workers in these families are mostly women, some child labour input occurs, mainly to assist the family business. Essentially, agarbathi requires the stick, a paste based on jigat powder (an adhesive-like substance made from powdered bark of the Maclilus makarantha tree), charcoal powder, and a series of natural products, in various combinations, to provide the fragrance Bamboo is the preferred species for making sticks, the preparation of the sticks alone involved about 30 million workdays.
“Rolling” the sticks to glue on the incense paste and incorporate charcoal powder (the end-product of rolling is “non-masala” sticks) also employs a large labour force. The raw materials – sticks, paste and charcoal – are provided by entrepreneurs and the rolling is done largely at home. Rolled sticks are purchased in units of 1000 Addition of the incense, to make “masala” agarbarthis is usually done in factories owned by microenterprises. The ration of labour is approximately 80% home based to 20% factory based. Home based labourers are linked to factories through local business units. Finished agarbathis are packed in paper or cardboard tubes. Usually paper from printing presses or cardboard is supplied to labourers under tie-up arrangements to produce the requisite packaging
Cost of agarbathis
The cost of these basic ingredients and the labour to produce the raw agarbathis accounts for only 10% of the cost of finished agarbathis. Three times that cost represents the perfumery ingredients of which two-thirds are imported. The various blending and individual ingredients are generally treated as “trade secrets”.
PRODUCTION AND CONSUMPTION PATTERNS A market survey by the National Council of Applied Economic Research the total quantity of agarbathi produced in the country at 147 billion sticks, valued at around Rs. 7 billion (US$ 196 million) (NCAER 1990). The distribution of the consumption is skewed in favour of the lower income group, which earns less than Rs 25,000 (US$ 700) per year but consumes a little over two-thirds of the production. The highest income group, with above Rs,56,000 (US$1,570) of annual income, purchases only 3% of the production. The consumption is also highly concentrated in rural areas (61% of the total consumption). The trend is similar throughout the country with southern and eastern regions reporting 64% consumption each in their rural areas. COST STRUCTURE of agarbathi
There are two stages involved in the production of agarbathi. One stage involves the production of non-perfumed (non-masala) agarbathi, and the second entails the production of perfumed (masala) agarbathi. The costs of production can also be disaggregated by these two stages as labour costs are significantly different in these two stages. Non-perfumed agarbathis are generally produced at home through the family contract system and take up to 80% of the total labour required; its share in the total production cost, however, is about 10% in preparing raw agarbathis The addition of perfumes is carried out in factories and takes about 20% of the total workdays required for the production and, along with packaging, accounts for about 60% of the production cost. Another 20% of the cost is incurred in marketing. Packaging is one major variable. Both the input costs and the value of the output differ from season to season and from place to place. This is because the materials are mostly purchased as residues from other industries. PRODUCTION DETAILS AND PROCESS OF MANUFACTURE
All the ingredients in powder form are mixed well in the proper proportion with water to a semi solid paste. This paste is applied to bamboo sticks and rolled on wooden-planks with hands uniformly. The raw sticks re them dried and packed in suitable bundles. Ram material required
Charcoal Powder , Gigatu , White chips powder , Whitechips powder, Sandalwood Powder, Sandalwood Powder, Bamboo sticks, Bamboo sticks, Kuppam Dust, Perfumes, Diluents like DEP etc. Small player in agarbathi market
traditional agarbathi manufacturers could compete with the big players if the quality of the product was good. In fact many companies that entered the market Small units numbering over 10,000 operate in different parts of the country and the industry turnover has been estimated at over Rs. 1,000 crores, providing employment to over 12 lakh people, directly and indirectly. After liberalisation many MNCs have ventured into this sector. MARKET POTENTIAL
Agarbattis are used by all communities in India, India is the largest producer of agarbathis in the world. As on today about 90 foreign countries are using our agarbattis. the main centers of manufacture being Mysore and Bangalore. As on today, about 1000 units exist through the State of Karnataka. Moreover, it is an export-oriented industry also. In fact, this is one the items considered for boosting exports. Owing to the low level of technology involved in this industry, this can be taken to rural areas without much difficulty, thus implementing the rural industrialisation policy of Government of India to a greater extent. India’s agarbathi exports touched Rs. 300 crores. Profit margin of industry
As the workers are linked to the factories directly or through contractors and their role ends at the raw agarbatti production stage and they do not have any interface with the market little attention has been paid in the literature to the trade and distribution network involving wholesalers and retailers, margins involved etc. Contractors have a mark-up of Rs. 3 to 4 per 1000 (or roughly 25 to 30%) at which they supply to factories and which presumably covers their costs of operations and profits.
Wages and Earnings:
In general, agarbatti rollers whether home or factory based are paid on a piece-rate basis. Earnings vary across states with workers in Karnataka appearing to be somewhat better placed in contrast to there counterparts in Gujarat and Andhra, the other two states for which estimates are available.
Workers here are paid at a rate of Rs. 9 per 1000 sticks and at an average productivity of 4000 sticks per full working day manage an effective wage rate of Rs. 36 per day.
The average worker manages to earn about Rs. 1000 per month. In Gujarat, the rate is much lower at Rs. 5 per 1000 sticks and combined with lower productivity rates yields the workers incomes in the range of Rs. 325 per month.
In Andhra a rate of Rs. 6 per kilo of masala processed (approximately 1100 to 1200 sticks) is reported.
Earnings for a family of six were reported in the range of Rs. 400 to 800 for a six day week implying an effective wage of Rs. 12 to 20 per day. Further, if the product is rejected for quality reasons the loss has to be borne by the workers lowering earnings further.
Factory based workers are paid somewhat better rates for higher quality sticks but given the lower productivity have the same effective wage rate.
(Sources: Kaur (1999), Krishnamoorthy (1999))
Contribution of women workers to the sector:
Women workers constitute 90% of the workforce of the industry which has an annual production value of around Rs. 8.5 billion.
Conditions of Work:
Homebased workers engaged in agarbatti making in Bangalore live and work near the factories. Agarbattis are rolled on the pavements and lanes around homes in urban slums. They sit on the floor and roll the agarbattis hunched over low tables bought out of their own resources. Legs are stretched under these low tables. The task is extremely ardous and repetitive. Most workers spend about 4-5 hours per day in this work combining it with their household responsibilities to get an occasional respite from the monotony. While children form a distraction, in general homebased workers have a more conducive work environment than their factory counterparts who sit in rows of workbenches in dingy,
The Policy Context
Impact of governmental policies on the agarbatti industry
In general, the liberalization of the economy and deregulation has had a positive expansionary impact on the agarbatti industry with increased exports, revenues and employment generation. However, certain areas of governmental inattention or anomalous policies hold back the progress of the industry. These are highlighted below:
Problems faced by industry
1. The industry is on an unsustainable growth path vis. a vis. the availability of key raw materials. The species Maclilus makarantha, the tree source for jigat powder, has declined considerably in South India and is currently being sourced from Uttar Pradesh. In the absence of targeted programmes to augment this species these supplies too will dry up while demand for jigat is predicted to grow by 50% over the next five years. A 40% increase in the demand for bamboo and 25% for charcoal in the same time frame is also predicted. Supply issues with respect to these are also not being addressed. Already the industry sources its bamboo splints from the far away North East. Shortages of raw material could jeopardize the economic viability of the industry and render thousands unemployed or displaced by substitutes. Efforts by relevant state governments to incorporate the raw material needs of the industry into their forestry and social forestry projects are urgently called for.
Currently the industry is taxed at multiple levels e.g. raw material taxes on bamboo, charcoal, jigat and aromas range between 25 to 90%, in addition to which a purchase tax on raw agarbattis and sales tax on the finished produce are levied. There is need to look at the tax structure in toto and determine if the burden of taxation is fair or whether it can be rationalized. 2. Different rates of taxation and differing labour law requirements across states creates an anomolous situation. For instance, Karnataka is the only state where the agarbatti industry falls under the purview of the Factories Act and which consequently has to pay wages somewhat in line with minimum wage requirements (wages for homeworkers have some relationship with and move in tandem with factory wages) and has to provide factory based workers with social security coverage. This along with much lower rates of sales tax in states like Bihar and U.P encourages the industry to migrate to these states to the detriment of the workers’ cause. A uniform coverage of the agarbatti industry under the Factories Act in all states is called for.
3. So far the industry has received little R & D support from governmental or private sources. Based as it is entirely on forest based natural resources and manual, labour-intensive, non polluting techniques of production it stands to carve for itself a niche as a `green’ industry. However, support in developing new products (mosquito repellents, air freshners, aromatherapy incense), exploring new markets and developing more sophisticated marketing strategies has not been extended to the industry in any substantial measure. Given its huge employment generation potential this is regretable. Of course, these efforts must be taken in tandem with measures to expand raw material supplies to fructify in terms of additional employment for the poor.
4. Bamboo based industries
The North east region of India has the maximum concentration of bamboo in India owing to its climatic conditions. There is no dearth of bamboo. At present bamboo is put only to traditional use, handicrafts and papermaking. Now the Government of India has announced the bamboo mission for promoting bamboo based industries in the North East Region. Machine made bamboo sticks, blades, ply, etc are some products, which has substantial potential.
North east region of India has the maximum concentration of The bamboo in India owing to its climatic conditions. There is no dearth of bamboo. At present bamboo is put only to traditional use, Now the Government of India has announced the bamboo mission for promoting bamboo based industries in the North East Region. Machine made bamboo sticks, blades, ply, etc are some products, which has substantial potential.
There are 400 exporters in India who together export Agarbatti (or incense sticks) worth Rs.800 crores. Of late multinational companies have introduced machine made agarbatti for the India market. As a result all other leading Indian manufacturers are using machine made round bamboo sticks for making agarbatti. It is estimated that the present requirement of round bamboo sticks is 2000 tonnes per month. Bamboo is found extensively in Nagaland. It occurs as a predominant plant in parts of the districts of Dimapur, Peren, Mon and Mokokchung; it is found mixed with other forest species in all other districts. About 5% of the growing stock of bamboo of the country is in Nagaland which is about 4,48,000 hectares. 1. A lack of reliable statistics on the total number of workers in the industry and their distribution, as well as their socio-demographic profile. All that is currently available are rough estimates or orders of magnitude not sufficient to either understand the magnitude of problems faced by the workers or to design appropriate legislative or policy measures to redress them.
2. Due to the homebased nature of the work there is absolutely no data available to guage the degree of involvement of child labour in the industry, the age of entry of children into the work force, the number of hours spent by them in this work or the impact on their health and educational status.
While the factory based sector constitutes only 20% of the agarbatti sector workforce given the geographic concentration of the industry in a few pockets an effective implementation of labour laws and minimum wages can be expected to have some trickle down impact on the homebased sector in terms of keeping workers informed of the value of their work and in keeping some sort of parity in earnings between the sectors. The relationship between wages in the formal and informal components of the agarbatti sector needs to be explored further. Conditions of work in emerging centres of manufacture in non traditional states such as Bihar and U.P need to be studied and compared to those in better regulated concentrations of the industry such as those in Mysore and Hosur in Karnataka. Emperical evidence is needed to verify whether infact the industry is tending to relocate and disperse to other areas to circumvent labour and tax laws and how this is impacting on existing workers.
Chatterjee, M. and Macwan, J., 1988. Occupational Health Issues of Self Employed Women: Agarbatti and Masala Workers of Ahmedabad. National Commission for Self Employed Women Workers.
Hanumappa, H.G., 1996. Agarbathi: A Bamboo Based Industry in India. INBAR, Working Paper No. 9
ILO, 1999. Women Workers’ Rights in India: Issues and Strategies -a reference guide.
ITC Limited had started its agarbatti division only in September 2004. Through its brand, Mangaldeep, the company is now recognised as one of the main national players in the market. The eight vendors of the company – three in Bangalaore and one each in Pondicherry (Sri Aurobindo Ashram), Coimbatore, Dera Bassi, Delhi and Tripura — have the capacity to manufacture 150 million sticks per month. This agarbatti division had a 100 per cent growth in the just concluded fiscal, with a turnover of Rs 30 crore. ITC Ltd has charted out aggressive marketing plans to promote its entire agarbathi range in India and in the international market as well. As for the Indian market, the company is planning to expand its existing number of retailers from 25,000 to two million across the country within a year. At present, the company’s 25,000 retailers cater to Maharashtra, Tamil Nadu, and Bangalore, targeting small convenience shops, including tobacco retailers.”
In order to create awareness about its agarbathi range, the company is for the first time planning to launch new mass media advertising campaigns which will include radio, television and print ad campaigns during “With the move, we hope to achieve a market share of around five per cent in the Rs 1,000-crore agarbathi market in India within a year,” he added. itc agarbathis catering to all the three segments. The ‘Spriha’ range, targeted at the top-end of the market, is priced at Rs 20 for 20 sticks in nagachampa and gugool fragrance. Spriha is made by the Aurobindo Ashram in Pondicherry. The company has also launched ‘Nivedan’, made by small-scale companies in Bangalore, targeted at the middle-end of the market priced at Rs 10 for 20 sticks in sandalwood fragrance. The lower-end ‘Ashageet’ agarbathi in jasmine and rose fragrance is priced at Rs 4 for 10 sticks and Rs 7.50 for 20 sticks,” he added. Once the company meets up the target of expanding its distribution network, it will foray into the international market within a year, he said. As part of its exports thrust, the company is also looking at the possibilities of foraying into countries such as the US, Europe and South-East Asia to export its entire range of agarbathis thereThe company had recently tied-up with Sify to sell its agarbathis online.
“More than selling online, our idea is to reach the Sify subscriber base and announce our arrival,” The Rs 1,000-crore agarbathi market largely comprises regional players. “The biggest player in this sector is Cycle Agarbathis, which has a five per cent share. ITC, on the other hand, has a two per cent market share. company is also looking at promotional exercises to increase awareness about its brand, in a market where brands really don’t matter. sponsored events such as the Spirit of Unity Concert at Rajahmundry in Andhra Pradesh and have also done sales promotion activities at the Tirupati Brahmotsav.”The company is also planning to launch four new fragrances under the Ashageet and Nivedan brands. But the company hopes that the natural incense stick (herbal agarbathis) segment will grow steadily in the future. Spriha brand falls under this segment.
This segment currently has just a five per cent market share, Also on the cards are plans to launch agarbathis at different price points in the fragrance segment. agarbathis are now available between Rs 4 and Rs 10, but we are now planning to launch small packs priced at Rs 2 in order to reach the mass market,” ITC hopes to become the No. 1 player in the market by the end of next year. ITC Ltd has decided to leverage Exim Bank’s services to market abroad its Mangaldeep brand of agarbattis, sourced entirely from cottage and small-scale sectors. The company has signed up with the bank for export marketing services, to utilise its large overseas presence to promote incense sticks with buyers, importers and distributors abroad.
As per the agreement, Exim Bank will help locate business partners for ITC agarbattis, The agarbatti SBU of ITC is currently developing fragrances and incense offerings to be positioned as lifestyle products for the Western market. supplying high quality products to mega retail establishments abroad. The bank already has a line of credit arrangement with the mega Singapore shopping outlet. The brand is now available in countries such as Singapore, Malaysia, Nepal, the UAE, Bahrain and the US. He put the export potential for agarbattis at Rs 300 crore, with the total consumer spend in the domestic market being Rs 1,200 crore.