Sustainable quality to make the difference: Kothari

This traditional fragrance industry in India has witnessed vast changes in the recent years with the technology. How the technology has evolved in this niche segment? 

The fragrance business is an interesting confluence of art and science. So while a perfumer is always looking for newer and more exciting scents, there is a huge science behind it, including the study of how ingredients interact with each other in a perfumery blend, the stability and the performance. 

The FAFAI R&D Centre is being established to give the industry easy and inexpensive access to cutting edge testing and evaluation of their products and ingredients. With consumers becoming more and more conscious of what they consume, its effects on them as well as the environment, there is a big shift towards creating more eco-friendly, sustainable and renewable products and the centre will help members achieve these objectives. 

What was the impact of Coronavirus lockdown on the Flavours and Fragrances industry?  

The Fragrances & Flavours Industry is a B2B supplying a critical ingredient to end-user FMCG companies. The Coronavirus had a mixed but mostly positive impact on our end-user industries and hence on the F&F Industry. Demand in some industries shot up, for example, demand for personal care, hygiene and wellness products like hand sanitisers shot up during the lockdown and contributed to the growth of our industry.

What is the market size of the industry in India and growth rate? Who are the customers?

The global flavours and fragrances market is projected to grow from $26.54 billion in 2022 to $36.49 billion by 2029, at a CAGR of 4.7 per cent. In comparison, the India fragrance market is estimated to be anything between $500 million and $1 billion, but it is growing at double double digits. It caters to personal care, wellness products, home care, pharma, food products etc.

There is rising preference towards natural ingredients rather than the chemical-based flavouring agents owing to health reasons. Is it advantage for India? 

Absolutely. India is blessed with a huge bio-diversity, various climates and soil conditions which affords India to produce a very large palate of natural aroma ingredients including natural essential oils, spice oils, mint oils, etc. Therefore, the shift towards naturals instead of synthetic, which was dominated by technological giants of the previous century, bodes very well for India. Today we export to over 160 countries.

What are the challenges the industry is facing today?

While the industry in India is fairly large, the biggest threat facing the industry is cheap imports being dumped from overseas. A fragrance is normally a blend of synthetic chemicals and natural essential oils blended together as per a formula or a recipe. The biggest challenge the industry faces is that we are subject to an inverted duty structure, where a large chunk of our ingredients, natural essential oils are subject to higher import duty compared to the end product which is fragrances. We have sent several representations to the government to correct this anomaly but to no avail.

We have not even asked for any reduction in the import duty of essential oils but instead asked for an increase in the import duty of finished fragrance compounds, a revenue positive thing for the government but have yet not succeeded with this. Hence, cheaper imports are flooding the Indian market in detriment to the Indian industry, scuppering its growth and is also against the principle of Make in India. 

How was the response of the FAFAI International Convention and Expo in Kolkata?

The response was fantastic. This was arguably the largest F&F Industry event ever held anywhere in the world. We had close to 200 international delegates and 2,200 Indian delegates at the event and the feedback that we have received has been extremely positive. We had a stellar line up of industry experts speaking at the event and the Expo covering close to 1,00,000 sq. ft. was sold out months before the event. 

I am confident that this event will act as a catalyst in promoting India as the preferred destination for investment and business for the F&F trade.