How India's Sandalwood Oil trade got hijacked
ard-e-sar ke vaaste
chandan lagaana hai mufeed,
Uss ka ghissna aur lagaana
dard-e-sar yeh bhi to hai
[Sandalwood paste is the ideal cure for a headache,
(But) its preparation and application is a headache in itself!]
That Urdu couplet best encapsulates Kannauj’s long-standing love affair with sandalwood oil and attar (perfume). Situated along the mighty Ganga in Uttar Pradesh, Kannauj is one of the oldest cities in the country. In its heyday, it was regarded as the Grasse of the East, after the French town famous as the perfume capital of the world.
Given the huge demand for sandalwood oil for making attar, Kannauj became the hub for distilling it even though most of the wood actually grew in the southern states of Karnataka and Tamil Nadu. The city dominated the world market for sandalwood oil for a long time, exporting roughly 100 tonnes — half its production — at the peak during the late 1980s and early 1990s.
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Image: Amit Verma
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As Australia started to develop Indian sandalwood plantations, India lost its grip on the Attar trade and resulted in desolate factories | |
But mention “chandan” (as sandalwood is known in Hindi) to Krishna Narain Kapoor, whose family has been engaged in the art of making attar based on sandalwood oil for over a century, and he looks away with a grimace.
“Why do you ask? What good will come of it?” His bitterness is not without reason.
The 65-year-old Kapoor’s ancestor set up the first and biggest modern distilling and perfumery company in Kannauj, Manaulal Ramnarain, in 1880. Over time, the family broke into four separate firms. Kapoor’s firm, Indian Fragrances & Chemicals, produced around 800 kilos of sandalwood oil every month and employed 80 people at its peak.
But now the shutters are down. His is not the only distillery to shut shop. India’s total shipments have plummeted to a paltry 5 tonnes and processors are increasingly buying foreign varieties of sandalwood oil. As for Kannauj’s attar industry, it is all but gone.
So what went wrong?
A Raw Deal
Insiders say things started going wrong in 1978-79 when Indonesia, then the biggest exporter of sandalwood in its raw form, banned the export of raw sandalwood. India stepped in to fill the supply void for the Far Eastern countries. They needed sandalwood for their incense industry and in religious ceremonies, and kept bidding the price higher.
Exporting raw sandalwood suddenly became more lucrative than making oil. The easy money involved in the supply of raw wood led to its widespread smuggling and mindless exploitation of sandalwood forests.
Ironically, it was a well-intentioned diktat for protecting sandalwood that delivered the knockout punch. In 1996, in an example of the road to hell being paved with good intentions, the central government decided to regulate the export of sandalwood and its oil by imposing export quotas. It set up a system of raw-sandalwood auctions. One could export the oil only if one bought the wood.
That move constricted supply and jacked up the price of Indian sandalwood oil. Today, it costs anywhere between Rs. 65,000 per kg (if it is extracted from smuggled wood) and Rs 1.5 lakh per kg. India has out priced itself from the market, while Australia has positioned itself as the dominant supplier of sandalwood and its oil. It has also started growing Indian varieties.
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