Assam is moving to reorganise its agarwood industry along the lines of its century-old tea sector, with Forest Minister Jayanta Mallabaruah announcing a new task force to regulate the trade, curb the grip of middlemen who currently capture most of the profit, and build a formal auction system for the state's roughly two lakh hectares of privately cultivated agar plantations. The push follows Assam's first-ever legal export of agarwood chips to the Gulf earlier this year and a relaxation of international trade restrictions that industry figures say could unlock a market worth up to Rs 50,000 crore annually if the sector is developed in an organised way.
Background
Agarwood — the dark, resin-infused heartwood produced by Aquilaria trees when they are infected by a particular mould, and marketed globally as "oud" — is one of the world's most expensive aromatic raw materials, prized in luxury perfumes, incense and traditional medicine across the Gulf, Europe and Southeast Asia. Assam, along with parts of Manipur, Nagaland and Tripura, has long been one of India's natural centres for Aquilaria cultivation, particularly in Upper Assam districts, where farmers have planted agar trees on private land outside reserved forests for generations. For years, however, the industry operated in a legal grey zone: strict international rules under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) treated agarwood cultivation and trade almost as though it were an offence, discouraging farmers from openly investing in or profiting from a resource many were already growing.
That changed with two connected developments. First, India successfully prevented Aquilaria malaccensis from being placed under CITES' more restrictive Review of Significant Trade process, and in April 2024 secured a formal CITES export quota for Indian agarwood — 1,51,080 kg per year for chips and powder/sawdust, and 7,050 kg per year for agarwood oil — giving the trade a legal international pathway for the first time. Second, building on that opening, Assam shipped its first legally approved commercial consignment earlier this year: 100 kg of premium agarwood chips to Saudi Arabia and 12 kg to the UAE, worth a combined Rs 2.35 crore, dispatched from Lokpriya Gopinath Bordoloi International Airport in Guwahati after clearing both CITES permits and a restricted export licence from the Directorate General of Foreign Trade.
Key Details
Speaking at a press conference at the Assam Administrative Staff College in Khanapara on August 26, Forest Minister Jayanta Mallabaruah laid out the state's next steps for turning that legal opening into a functioning industry.
- Scale of cultivation: Farmers are growing agar on nearly two lakh hectares of private land, concentrated in Upper Assam districts, outside government forest reserves.
- The middlemen problem: Mallabaruah said middlemen and agents currently exert very strong control over the agarwood trade, capturing most of the profit while the farmers who actually grow and tend the trees see comparatively little benefit.
- Task force: A dedicated task force has been constituted to monitor the business and examine how the sector can be reorganised on more transparent, farmer-friendly lines.
- Auction system: The government is working on establishing a formal agarwood auction mechanism — explicitly modelled on the tea industry's long-established auction system, which gives growers price transparency and a direct route to buyers rather than relying on informal middlemen.
- Industry-building: Officials are also prioritising the establishment of agarwood-based processing industries within Assam itself, rather than allowing raw material to leave the state for value-added processing elsewhere.
- Long-term ambition: Assam's Chief Secretary has separately said the state aims to become globally known for agarwood, positioning it as a third pillar of the state's identity alongside tea and oil.
The regulatory shift is also being framed as a message to farmers directly: officials say agarwood cultivation, once viewed almost as an offence under the old restrictive framework, should now be understood as an activity people can pursue freely within the rules, with the state actively trying to make cultivation and legal trade more accessible rather than leaving farmers to navigate a legally ambiguous market on their own.
At a Glance
| Model | Tea Industry (Existing) | Agarwood Industry (Proposed) |
|---|---|---|
| Price discovery | Formal auction system (Guwahati Tea Auction Centre and others) | New auction mechanism under development |
| Farmer-buyer relationship | Regulated, transparent channels | Currently dominated by middlemen capturing most profit |
| Value addition | Extensive in-state processing (tea gardens, factories) | Government prioritising in-state agarwood-based industries |
| Export status | Long-established global export market | First legal export (Rs 2.35 crore to Saudi Arabia/UAE) completed this year |
Local Impact
For the farming households across nearly two lakh hectares of Upper Assam who have invested years in growing Aquilaria trees, the promised reforms could mean a significant shift in who actually captures the value of the crop. Under the current middlemen-dominated system, growers have had limited ability to negotiate fair prices for a product that can fetch extraordinary sums in international markets once processed and exported — the state's very first legal export consignment, weighing just 112 kg combined, was worth Rs 2.35 crore, illustrating how much value currently accrues at the export and processing end rather than at the farm gate. A functioning auction system, similar to what tea growers already have, would give agarwood farmers clearer price signals and a more direct route to formal buyers.
The push to build agarwood-based processing industries within Assam also carries employment implications: rather than raw agar wood or chips leaving the state for processing elsewhere, in-state distillation and processing facilities could create local jobs in an industry that industry estimates suggest could be worth up to Rs 50,000 crore annually if fully organised — a scale that would make it a meaningful contributor to the state's broader economic ambitions.
What Happens Next
The newly constituted task force is expected to examine the sector's structure and recommend specific mechanisms for the proposed auction system, though a firm timeline for its rollout has not been announced. Given that the state's first legal export only occurred this year, the immediate priority will likely be scaling up the number of licensed exporters and processing units able to navigate the CITES quota and DGFT licensing requirements, since India's national quota — over 1.5 lakh kg of chips and powder annually — currently exceeds what a nascent formal industry has been able to legally export. Farmers, meanwhile, will be watching whether the promised auction mechanism materialises quickly enough to change their bargaining position with the middlemen who currently dominate the trade.
Frequently Asked Questions
Why is Assam government focusing on agarwood now?
A 2024 CITES export quota gave Indian agarwood a legal international trade pathway for the first time, and Assam completed its first legal export consignment this year, prompting the government to try to organise the sector before informal, middlemen-driven trade patterns become entrenched.
How much land in Assam is used for agarwood cultivation?
Farmers cultivate agar on nearly two lakh hectares of private land, concentrated in Upper Assam districts, outside reserved forest areas.
What problem is the new task force meant to solve?
Forest Minister Jayanta Mallabaruah said middlemen currently capture most of the profit from agarwood sales, leaving farmers who grow the trees with comparatively little benefit; the task force will examine how to reorganise the trade more transparently.
What is the proposed agarwood auction system modelled on?
It is explicitly modelled on Assam's long-established tea auction system, which gives growers transparent pricing and direct market access rather than relying on informal intermediaries.
How big could Assam's agarwood industry become?
Industry estimates suggest the sector could be worth up to Rs 50,000 crore annually if cultivation, processing and exports are developed in an organised manner.
What was in Assam's first legal agarwood export?
A consignment of 100 kg of premium agarwood chips to Saudi Arabia and 12 kg to the UAE, worth a combined Rs 2.35 crore, shipped from Guwahati's international airport after clearing CITES and DGFT approvals.
Is agarwood cultivation legal in Assam?
Yes, though officials note that under the previous restrictive international framework it was often treated almost as an offence; the government is now actively messaging that cultivation and trade are permitted within the current rules.
Sources
- The Assam Tribune
- Pratidin Time
- Sentinel Assam
- Northeast Today