In the Budget 2026-27, the government has announced plans to promote Agarwood cultivation. The aim is to increase farmers’ income and make farming more profitable by cultivating this wood, which can fetch up to Rs70 lakh per kilogram.
Agarwood Plantation
New Delhi: In Budget 2026-27, the central government has outlined a clear strategy to transform agriculture from a traditional practice into a profitable business. This time, the focus is not just on crops, but also on related businesses, value addition, and high-value crops. Finance Minister Nirmala Sitharaman has allocated a budget of Rs1,62,671 crore for the agriculture sector to increase farmers' income and create new employment opportunities in rural areas.
A major highlight of this budget is the announcement to promote agarwood cultivation in the northeastern states. Agarwood is a type of wood whose value is often said to be higher than that of gold. The government believes that agarwood cultivation can prove to be a game-changer for farmers.
What is Agarwood?
Agarwood, also known as Oud or Gaharu, is a highly valuable, dark, and aromatic resinous heartwood produced by Aquilaria trees in response to fungal infection. Primarily found in Southeast Asia and India, this "wood of the gods" is used in high-end perfumes, incense, and traditional medicine, with top-grade oil selling for tens of thousands of dollars per kilogram.
Agarwood outprices Gold!
Why is Agarwood so expensive?
The price of agarwood is very high due to its rarity, fragrance, and uses. According to media reports, one kilogram of good quality agarwood can cost more than Rs70 lakh. The price of oud oil extracted from it is even more astonishing; it is said that one gram of oud oil can sell for Rs8,000 to Rs9,000. This is why it is considered one of the most expensive natural fragrances in the world. Where is agarwood found in India?
In India, agarwood is naturally found in the northeastern states of Assam, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, and Meghalaya. In Assam, it is locally known as Jasi or Sanchi. Now, its scientific and organic cultivation has also started in western coastal states like Kerala, Maharashtra, and Gujarat, where the climate and soil are considered suitable for its growth. The agarwood tree grows to an average height of 20 to 21 meters and has a straight and sturdy trunk.
Uses of Agarwood Oil
Agarwood oil, extracted from the agarwood tree, is one of the most expensive and oldest raw materials in the perfume industry. It is used as a pure perfume and is also blended with fragrances like sandalwood, musk, saffron, and amber. Additionally, agarwood oil has been used in traditional medicine in China, India, and Arab countries for centuries.
Why is this a great opportunity for farmers?
The focus on promoting agarwood in the 2026-27 budget aims to connect farmers with a high-value crop. High profitability from a small piece of land, long-term stable income, and demand in the international market make it very attractive. If the government's plans are implemented effectively, agarwood cultivation can become a strong source of income for farmers in the coming years.
