How India's Sandalwood Oil trade got hijacked
Ironically, India will soon begin buying sandalwood oil of the indigenous variety grown in Australia.
“Indian sandalwood oil is priced at Rs. 65,000 per kilo which is easily twice the price of sandalwood oil from Australia and three times the price of African sandalwood oil. Selling such a product at a global level is impossible,” rues Kapoor. On top of that, it takes inordinately long to get an export licence. The first set of export licenses were issued in 1998, almost two years after the first auction.
“How could you wait for two years before delivering an export order? No international client will wait that long,” says Moraddhwaj Saini, another erst-while distiller. The bigger problem as a distiller and exporter is the lack of surety about obtaining the next license and thus guaranteeing regular supplies to one’s clients overseas.
Kapoor finally brought down the curtains on his distillation plant last year. Now he has a plant worth Rs. 1 crore gathering dust. Kapoor’s distillery, one of 22 such distilleries in Kannauj, was the last to be closed down. “It was not easy for me to give up on my family business,” he says.
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Image: Amit Verma
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GOING TO SEED: An offshoot of a century-old sandal oil distillation business, Indian Fragrances & Chemicals used to make 800 kg of oil a month | |
“My heart skips a beat when I think of chandan,” says 80-year-old Saini, wistfully gazing at the twin smokestacks of his idle distillation plant worth Rs. 40 lakh. His factory was one of the first few to shut down in 1998.
A Fading Fragrance
One obvious fallout of the unabated increase in sandalwood prices is that it has totally distorted the character of Kannuaj’s USP — its traditional attar industry.
In the 1970s, attar made from top-quality sandalwood oil sold as a personal fragrance; that from inferior quality oil went into making incense and flavouring pan masala.
When oil prices shot up, attar as a personal fragrance became prohibitively expensive. Already, preferences were changing towards modern perfumes; this hastened the process.
By the start of the 1980s, attar manufacturers turned to the other domestic industry which was coming up in a big way — the pan masala and tobacco industry. But attar producers had to meet the price compulsions of pan masala and tobacco industry, so they began substituting sandalwood oil with liquid paraffin and other similar compounds as the base ‘note’ or layer. “How can a gutkha (a mix of pan masala and tobacco) sachet continue to be priced at just Re. 1 all these years when sandalwood oil prices are shooting through the roof?” asks Saini. “Attar manufacturers had to find some way to substitute sandalwood oil.” 
Today, 90-95 percent of all attar manufactured in Kannauj is used for flavouring pan masala and tobacco. Only around 10-15 percent of all attars use sandalwood oil primarily because the main consumers of attars (the pan masala industry) do not want to increase the retail prices of their products.
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