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Sandalwood Economy – How Sandalwood Cultivation can bring fortunes to Growers and the Government- Part 2

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In the first part (Read Part-1) we have read about what makes Mysuru sandalwood oil special. In the second part, we shall understand the ways in which the government can kick-start the booming sandalwood economy.

There is an insatiable demand for Sandalwood oil in the world market, whose rates have crossed USD 3000 per liter. India has enormous potential to meet world demand, but unfortunately, living with self-imposed restrictions limits our oil production to a bare minimum. This article discusses how to break all barriers to sandalwood oil production and unleash a roaring sandalwood economy where everyone involved in the trade makes money.

What makes sandalwood so much in demand?

Sandalwood oil packs enough punches like no other when it comes to benefits. 

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  • Its potent antiseptic, extremely skin-friendly properties which make all high-end/ expensive products use it. Following category of products use sandalwood oil.
    • Men’s and women’s grooming products, 
    • Cosmetics,
    • Toiletries
    • Aromatherapy oils to reduce stress, hypertension and heals wounds and treats skin blemishes
  • It has anti-tanning/moisturizing quality
    • High-end skin whitening, skin toning/ softening/moisturizing/ anti-aging creams have it
  • When consumed internally it works wonders
    • It can act as an antiviral, fever lessening, Blood pressure correcting, mildly sedative agent. So, sandalwood oil is used in Ayurvedic and other herbal healing products.
    • It is used as a natural flavoring agent in the food industry. Hence sandalwood oil makes food smell good and tasty.
  • Its fragrance is heavenly
    • Sandalwood oil has a very long-lasting fragrance, which experts claim to last over 24 hours when used on the skin. This is much longer than other essential oils like Jasmine oil, rose oil, lemon oil, lavender oil, etc.
    • The divine fragrance oozing out of the artwork made in sandalwood can last for decades. The art piece not only mesmerizes our eyes but brings in tranquility with its unique woody fragrance.
  • Sandalwood bark contains tannins
    • Special tannins found in sandalwood find its usage in the making of natural dyes.
Representation Pic | Source

Quality sandalwood is grown in southern India

Sandalwood is indigenous to Southeast Asia and the Southern region of India. The government controls sandalwood tree cultivation in India, and because of that,  tree cultivation and  harvesting activities are highly restricted. These restrictive government policies impair sandalwood production. Though sandalwood can grow across India, the top OR premium quality ones grow in the Western Ghats and a few other mountain ranges such as the Kalrayan and Shevaroy Hills. 

Sandalwood Market

Though many varieties of sandalwood trees are grown across the globe, the Indian and Australian sandalwood varieties are famous for their texture, fragrance, and yield. So, they have excellent commercial value in the market. Apparently, India and Australia are the two largest growers of sandalwood. 

The biggest markets for sandalwood are the United States, China, Japan, Europe & the Indian domestic market.

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Competition to Indian sandalwood is heating up

Looking at the huge demand and supply gap and the limitation India has to produce sandalwood in bulk, a few ASEAN countries like Malaysia, Vietnam, Thailand, and South American countries like Colombia, Brazil, etc, which have similar climatic conditions to South India, have jumped on the fray. They are steadily increasing their sandalwood production and are trying to dominate the global supply in the near future. This intense competition is a threat to India’s sandalwood business and she can’t take it lying down.

What needs to be done to handle the threat?

The government should take this matter seriously and do whatever to double, triple OR quadruple sandalwood supply in the fastest possible time frame. Government should quickly do following

Openup sandalwood business to public

(a) The government should open up the sandalwood business and free it from all governmental controls in the truest sense. 

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(b) The freer the sandalwood business is, the more people will come into business.

(c) Declare it as a core industry that makes it eligible for term loans at the lowest interest rates.

(d) Incentivize sandalwood growing, harvesting, sandalwood oil distillation, and extraction activities. This will attract investors.

(e) Give enticing tax breaks to people in the sandalwood business – growing, harvesting, oil extraction, exporting, making and selling sandalwood artwork.

Representation Pic | Source

Start Taluk-level co-operative societies

The government should start Taluk level co-operative societies to distribute sandalwood saplings and record the growers’ data on an online database. These societies should help growers to grow their produce without any hassles. 

Start sandalwood board – sandalwood city Mysuru is the ideal location

To promote the production, distribution, and sales of sandalwood and its downstream products nationally and internationally, the government should start a SANDALWOOD BOARD” along the lines of the coffee board, tea board, spice board, commodity board, etc. 

Based on the demand and supply situation, the board should fix the rates for sandalwood and sandalwood oil. 

Allow corporates to enter into sandalwood business

To increase production of both sandalwood and sandalwood oil, the government should rope in MNCs and encourage corporate farming. They can lease land from individual landholders and grow sandalwood trees. As an intercrop, they can grow varieties of veggies and fruits which can be processed and sold abroad.

Allow electronic trading

The Sandalwood board should facilitate bulk buying/ selling of sandalwood/ oil through an ELECTRONIC PLATFORM exclusively built for that.  The government should allow local/ international institutional buyers to participate in the auction.

The payment settlement system should take care of settling all kinds of payments within the promised time frame. The goods dispatch and delivery should happen in a professional way to deliver it within the promised time frame.


India has committed to move her citizens out of poverty in the shortest possible time. 

When the economy crosses 12 Trillion USD, that’s when poverty can end. In order to do that fast, the government should explore various ways, and one of them is to embrace agroforestry – growing/ harvesting sandalwood in a big way. When done right, the agroforestry can fetch handsome returns to the growers, investors, tradesmen. The government should quickly come up with policies supporting that.

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