ITC Ltd. Announced Agreement with BRTC to Expand its Agarbatti Production
- Published | 09 November 2021
ITC Ltd., one of India's leading private sector companies, signed an agreement with the Bamboo Research and Training Center (BRTC), Maharashtra, under which they agreed that the latter will supply the agarbattis (incense sticks) for its agarbatti brand, Mangaldeep. According to the arrangement the two parties agreed upon, BRTC will exclusively manufacture and package incense sticks, as per ITC’s specifications. The agreement is bilateral where ITC will facilitate and assist BRTC to achieve and maintain the brand’s manufacturing standards and offer them technical support to ensure quality compliance.
The agreement is for a period of four months and covers the entire production cycle, i.e., from raw material accumulation to packaging and storage. Quoting Ravi Rayavaram, Chief Executive, Agarbatti And Matches Business, ITC, “In line with ITC's Triple Bottom Line philosophy of building economic, environmental and social capital, Mangaldeep agarbattis are manufactured by small-scale and cottage units, providing livelihood opportunities for thousands of people. This agreement with BRTC is yet another meaningful step in that direction and aims to enhance the competitiveness of the small-scale and cottage units through our complementary R&D-based product development and strengths in trade marketing and distribution.”
ITC has always been at the forefront of onboarding MSMEs and autonomous bodies to strengthen its supplier base. Entering the agarbatti market in 2003, Mangaldeep Agarbatti, has managed to successfully establish itself as the leading incense stick brand in India. It is constantly sourcing small and cottage vendors from potentially resourceful states such as Tamil Nadu, Andhra Pradesh, Assam, Bihar, Tripura, and few other states. The offers of assured buybacks from the producers by ITC regardless of their production capacity is what makes ITC stand out in the competition.
The agarbatti (also known as joss stick in China or incense stick in other countries) business always carried huge potential in a country like India. This is why, brands like Cycle Pure, owned by N Ranga Rao & Sons, and ITC Ltd., which owns Mangaldeep, are able to establish a standalone business out of this ordinary yet crucial component of Indian culture.
According to Bluewave Consulting, the India agarbatti market is mainly based on the small and cottage industry. However, with the support of big industry players such as ITC, the agarbatti producers are able to market their premium quality incense sticks and establish themselves as the dominating player in the market, giving tough competition to other countries like China and Vietnam as well.
Indian culture has a very deep-rooted significance of agarbattis that goes decades back. This item is prominently used in various rituals and customs of cultures and religions that blend in the society. Agarbatti holds spiritual importance and is used at holy places and is often regularly used in Indian households during religious ceremonies. The incense sticks are also gaining huge popularity for their use during meditation or aromatherapy due to their soothing fragrance. Due to this, regions like the Gulf, Europe, and Africa are emerging as the leading markets for Indian agarbattis and hold huge growth potential for the market.
Based on Bluewave Consulting’s report titled “Indian Agarbatti Market '', the market is estimated to witness highest growth in the upcoming years. The low-cost production requirements involved in the agarbatti production and various government initiatives to promote the country’s self-reliance agenda, the small and collage agarbatti producers are estimated to register remarkable growth in the forecast period of 2021-2027.
According to the Khadi and Village Industries Commission, around 1,490 tonnes of agarbattis are consumed every day in India, but only 760 tonnes are produced. The supply-demand gap results in the importation of bamboo from bamboo-producing countries like China and Vietnam. However, the underproduction of incense sticks also provides an opportunity for local producers to expand in the years to come. Furthermore, the symbiotic relation of big players like ITC and local producers for exchanging manufacturing and marketing expertise is anticipated to boost the India agarbatti market during the forecast period.
Furthermore, high import duty on the agarbattis specifically from China and Vietnam is expected to bring prosperity in the local agarbatti market in India as well. The Central Government increased the import duty on bamboo sticks from 10% to 25% to limit its dependence on imports and self-employment opportunities in the country. According to the statement by the Khadi & Village Industries Commission (KVIC), this move is aimed towards generating at least one lakh (one hundred thousand) new jobs in the agarbatti industry.
However, the hike in import duty on bamboo sticks had other negative consequences as well. Raw agarbatti was categorized as a restricted item by the Ministry of Commerce in August, 2019, because of a sharp increase in shipments from China and Vietnam. However, the shortage of bamboo in the local industries for agarbatti production is pushing the locals toward importing bamboo for raw agarbattis. Despite the fact that India is the 2nd largest bamboo producer in the world, it is also the second-largest importer of bamboo and its products.
However, the government bodies have now started giving due attention to this direction as well. By the end of the next 3 to 4 years, the KVIC intends to make India self-sufficient to cover the demand and supply gap in the agarbatti production industry.
Please Find Below Related Reports:
Contact Us:
BlueWeave Consulting & Research Pvt. Ltd
+1 866 658 6826