Trade, import and export for MSMEs: The import duty hike will help in “setting up of new agarbatti stick manufacturing units to meet the ever-growing demand of agarbatti in India.”
Trade, import and export for MSMEs: Increase in import duty on bamboo sticks from 10 per cent to 25 per cent is likely to create at least 1 lakh jobs in eight-10 months in the agarbatti (incense sticks) industry, according to Khadi & Village Industries Commission (KVIC). The hike in import duty was to boost usage of domestic bamboo for Atmanirbhar Bharat, Central Board of Indirect Taxes and Customs had tweeted on Tuesday announcing the hike. The decision was taken to offset the “huge employment loss” in the sector due to the “heavy import of bamboo sticks from China and Vietnam,” MSME Ministry said in a statement on Thursday. The import duty hike will also help “setting up of new agarbatti stick manufacturing units to meet the ever-growing demand of agarbatti in India.” Agarbatti industry forms part of India’s vast Village Industry.
According to KVIC, India’s agarbatti consumption is pegged at 1,490 tons per day, however, 760 tons per day is produced. This led to a massive increase in the import of raw agarbatti in 10 years from 2 per cent in 2009 worth Rs 31 crore to 80 per cent worth Rs 546 crore in 2019. The decrease in import duty to 10 per cent from 30 per cent in 2011 also contributed to the spike. “This hit the Indian agarbatti manufacturers hard and resulted in the closure of nearly 25 per cent of the total units,” the commission added.
However, KVIC later sought Commerce Ministry’s support to revive the sector and subsequently the ministry had put import of raw agarbatti under ‘restricted’ category on August 31, 2019. Even though this helped in bringing back to life hundreds of agarbatti units in states including Gujarat, Uttar Pradesh, Maharashtra, Madhya Pradesh and multiple North-Eastern states, it also triggered import of round bamboo sticks for making raw agarbatti. As a result, the import of bamboo sticks went up to Rs 370 crore in FY20 from Rs 210 crore in FY19.
“India is the 2nd largest producer of bamboo in the world but ironically, it is also the 2nd largest importer of bamboo and its products,” said Vinai Kumar Saxena, Chairman, KVIC. The hike in import duty is soon expected to make India “atmanirbhar” in agarbatti production, he said. India’s current production of bamboo is 14.6 million tons annually involving close to 70,000 farmers in the bamboo plantation. There are 136 bamboo varieties in India.