GST: Agarbathi industry engulfed in lockdown smoke

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Many women involved in agarbathi making have turned financially vulnerable as production has come to a virtual halt due to lockdown. The industry, which is pegged at Rs 7,000 crore at the country level, employs about six lakh people, mostly women. The production work generally is assigned to clusters.

The industry is highly fragmented with about 3,000 manufacturers with a bulk of them in the unorganised sector, said Arjun Ranga, president of All India Association of Agarbatti Manufacturing (AIAAM). Agarbathis are key paraphernalia for pujas and in that sense is an essential product. But given the constraints in distributing them due to lockdown conditions, it is not so essential compared to staples.

Distribution network is a strong point for the industry. “There is no place in India where agarbathis are not available,” he said about the industry depth. However, the industry has seen near zero sales due to lockdown. Stocks that were with the retailers were liquidated.

On a query if closure of temples had any impact on the trade, Ranga said that the trade is not dependent on temples for sales as there are hardly any institutional sales. But on the other hand, it is the devout visiting temple who buy the agarbathis. “Those buying agarbattis for use at homes account for bulk of the sales,” he said.

The spend, however, is a low Rs 100 per month per house, said Ranga, who is also the MD Cycle Pure Agarbathis. According to him, use of incense sticks is deep-rooted and puja is incomplete without the use of agarbathis. The industry is recognised as a handicraft trade and has many local women rolling the incense sticks. Many such clusters are present in Telangana, Karnataka, Andhra Pradesh, Maharashtra and Gujarat, Bihar and the North Eastern States.

GST has helped the industry spread. Before GST, agarbathis were required to be sold in the same State where they were manufactured. Now with GST in place, it has allowed for distributed manufacturing. For instance, in case of Cycle, it has a manufacturing cluster near Hindupur in Andhra Pradesh. This will also cater TS. The aromatic compounds needed for this unuit are made at its unit near Mysore, he said. It will take about two months after the lockdown is completely lifted to reactivate the supplychain. Now, transport lorries are not available, he said.

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