Agarwood, or oud as the world knows it, is among the most coveted natural aromatic raw materials in global perfumery ~ and India’s strongest resource base lies in the Northeast. North Eastern States hold 96.6 per cent of India’s agarwood resource, about 135 million trees, with Assam and Tripura dominating the base. This concentration gives the region a distinct natural advantage over other parts of India and is the natural anchor for India’s entry into oud trade. Since 2019, the agarwood sector has grown rapidly, with tree numbers increasing from 1.5 crore in 2021 to 2.2 crore in 2026.
Of these, 1.5 crore trees are under 10 years old and 0.7 crore are over 10 years old. Legal exports began after 2023, with 40 kg of agarwood chips and 18.5 kg of agar oil exported to the Middle East, along with smaller quantities sent to New Delhi. For the Northeast, agarwood is not just a natural resource. It is civilisational. Assam’s relationship with agarwood predates any modern export policy. The region’s manuscript culture used sanchipat, or agarutvak ~ the treated bark of Aquilaria malaccensis ~ as writing material, a cultural memory that endures to this day. Northeast India does not need to construct an oud identity for export brochures. It needs to reclaim one.
This distinction matters enormously in a global market that increasingly pays a premium for authenticity. When a buyer in Dubai or Paris reaches for oud, they are not simply purchasing a fragrance ingredient ~ they are purchasing provenance, heritage and trust. The Northeast carries all three. That combination is the Northeast’s structural advantage ~ one that cannot be replicated by plantation programmes elsewhere or synthesised in a laboratory. The commercial opportunity is substantial. Agarwood demand is concentrated in high-value fragrance, incense and wellness markets, with strong demand in Gulf Cooperation Council countries, especially the UAE, Kuwait and Saudi Arabia, and growing interest across the US and Europe for luxury perfumery and natural aromatic ingredients.
A recent estimate places the global agarwood chips market at US$44.29 billion in 2025, projected to reach about $90.56 billion by 2035. While these market estimates vary because agarwood moves across chips, oil, incense, cosmetics, medicine and informal channels, the direction is clear ~ oud is a premium global ingredient. The question is not whether this market will grow. It will, of course. The question is who captures the value. India has already begun to cash on this opportunity. For exporters, the opening is both regulatory and commercial. During 2024–27, the export quota for artificially propagated agarwood material has been raised from 25,000 kg to 1,51,080 kg for chips and from 1,500 kg to 7,050 kg for oil, significantly widening the legal export window for compliant trade.
The DGFT has also moved the Certificate of Origin process onto the Trade Connect Platform, replacing a largely offline system with a paperless, traceable workflow, further streamlining underway to timelines and improve transparency. In luxury natural products, documentation is not merely paperwork, it is a potential opportunity to access premium market. It is a signal that India is ready to compete at scale in the legal, compliant segment of the global agarwood trade ~ a segment that is growing faster than the informal market as destination countries strengthen their import verification requirements.
Tripura led the way in 2024 with the first legally compliant agarwood oil export from the NER comprising 2.7 kg of agar oil to Dubai, followed by further consignments of chips and oil in 2025. Building on this, Assam achieved a major milestone in May, 2026 with legal export of 112 kg of agarwood chips worth Rs 2.35 crore to Saudi Arabia and the UAE. Together, these developments signal a transition from fragmented informal trade to a formal, compliant and export-oriented agarwood ecosystem. For agarwood farmers in the Northeast, the opportunity is generational.
This shift means better price discovery and new income from nursery raising, plantation and inoculation services. Smallholder farmers who have historically treated agarwood as a supplementary or subsistence resource can, with the right support, become suppliers to some of the world’s most discerning luxury buyers. Farmer Producer Organisations (FPOs) and Self-Help Groups (SHGs), particularly women-led collectives which already have a strong presence in the Northeast’s rural economy, are positioned to anchor aggregation, quality sorting and direct linkages to processors and exporters – capturing a far greater share of the value chain than individual smallholders can on their own.
For processors, it is an opportunity to scale up manufacturing, engage in grading, testing and product development – in building the distillation and blending infrastructure that currently forces Indian raw material to travel abroad before returning as finished product. Every step up the value chain ~ from chips to oil, from oil to finished fragrance, from finished fragrance to a branded, certified product ~ multiplies returns and deepens the region’s position in the global supply network. India has already begun to act decisively on this opportunity, with the Ministry of Development of North Eastern Region (DoNER) playing a central coordinating role in building the agarwood value chain across the region.
MDoNER has steered the agarwood agenda from consultation to implementation through a sequenced process: an inter-ministerial consultation in October 2023, constitution of an Inter-Ministerial Task Force in November 2023, submission of its recommendations in August 2024, and adoption of a sector promotion roadmap in October 2024. An Agarwood Steering Group has since been constituted in the MDoNER to oversee implementation. The Steering Group brings together Central Ministries and agencies, NE State Governments, forest departments, export promotion bodies, NEC, NERAMAC, technical institutions, industry representatives and other stakeholders.
This wholeof-government and stake- holder-led design ensures that the roadmap is not designed in isolation, but is shaped by regulatory requirements, scientific inputs, market realities and ground-level production challenges. Work is progressing across resource assessment, area expansion, quality standards, GI positioning, verification of inoculation products, customs sensitisation, export facilitation, cluster development and market infrastructure. Public investment in agarwood cluster development in key production hubs such as Golaghat in Assam and Kadamtala in Tripura, along with the proposed Agarwood International Trade and Research Centre in Agartala, further supports this momentum.
The recognition of agar tree promotion in the Northeast in the Union Budget 2026-27 reinforces this. This and other efforts show that agarwood is being positioned not as a scattered local activity, but as a national export opportunity rooted in the NER. What makes the current moment different from earlier, piecemeal efforts is the convergence of multiple arms of government around a shared agenda. The DoNER Ministry is coordinating across the Ministry of Commerce (DGFT), the Ministry of Environment, Forest and Climate Change (which governs Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) compliance and species protection), the Ministry of Finance (customs sensitisation and export facilitation), governments across all eight northeastern states, Agricultural and Processed Food Products Export Development Authority (APEDA), and regulatory bodies.
Farmer groups, FPOs, SHGs, research institutions, distillers and exporters are active participants in the Agarwood Steering Group ~ not passive recipients of policy. This whole-of-government framework, with stakeholders embedded within it, is what distinguishes the current push from earlier attempts that remained siloed within single departments or single states. Civil society organisations, academic institutions and industry associations are also engaged in building the knowledge commons ~ on inoculation techniques, grading standards, sustainable harvesting protocols and market intelligence ~ that the sector needs to professionalise. The agarwood value chain, in this conception, is not just a government project. It is a national economic opportunity being unlocked through coordinated public action.
Agarwood forms when Aquilaria trees produce resin in response to injury or infection. With verified artificial inoculation and modern cultivation, the sector can shift from chance-based extraction to managed, traceable production. Since agarwood-producing Aquilaria species are CITES-regulated, legality and sustainability are central to the export story. International trade in agarwood is subject to controls intended to ensure that harvest and export do not threaten species survival. A traceable certification stack linking plantation source, inoculation, grading, testing, CITES-compliant documentation and origin identity can position Northeast oud as legal, sustainable and authentic.
That provenance itself is a premium, and one that competitors operating informally cannot credibly claim. The sector presents a multi-stage investment opportunity that has barely begun to be explored. On the upstream side, there is significant scope for investment in quality planting material, nurseries, scientific inoculation services and plantation management support. In the mid-stream, the region needs modern distillation infrastructure, grading and testing laboratories. Downstream, the opportunity lies in fragrance formulation and compounding, bakhoor and luxury incense manufacturing, cosmetic ingredient extraction, branded packaging, export marketing, warehousing and direct-to-consumer retail for premium segments.
With the right ecosystem, private investment can help the Northeast move from being a supplier of raw material to becoming the source of premium Indian oud products. The institutional framework is in place. The export window has opened. The investment interest is beginning to build. State Governments now need to do the last-mile work. They must support access to quality planting material, technical extension for inoculation, transparent and time-bound local clearances. States must promote formation of farmer groups/FPOs to aggregate quality material and contract directly with global buyers, instead of remaining dependent on opaque intermediary channels.
The State must invest or facilitate investment in common facilities for grading, testing, distillation, product development and training-cum-incubation in blending and perfumery, so that quality upgradation becomes accessible to small producers. The State must also create an enabling policy environment for land, forest-produce movement and enterprise support so that private investors can commit capital with confidence. Finally, states need to appoint dedicated nodal officers for the agarwood sector who can coordinate across forest departments, agriculture departments, commerce departments and export promotion bodies – and who are accountable for measurable outcomes: number of legally compliant farmers, volume of certified exports, number of active FPOs, and progress on cluster development.
The sector is too important, and the window of opportunity is too specific, for it to be managed as an afterthought within broader departmental portfolios. If India gets this right, the Northeast will not remain merely a supplier of agarwood but become the home of authentic Indian oud products. The opportunity is already growing in India’s own backyard ~ in the agarwood landscapes of the Northeast. The task now is to recognise, organise, and certify it and take its story to the world with a distinct identity ~ “The Indian Oud”.
(The writer is Chief Minister of Tripura)