Indian fragrances, flavours industry fears losing ground to China on exports, Retail News, ET Retail

Indian fragrances, flavours industry fears losing ground to China on exportsMUMBAI: The Indian fragrances and flavours industry, considered to be among the fastest growing industries globally, fears losing its ground to China in exports, given the temporary lockdown.

The industry, which is an ancillary industry to FMCG, food processing and pharma industries, said in a statement that it is currently suffering heavily due to the extended lockdown in the country. Their supply chains are completely disrupted, and the production has been badly hit due to the coronavirus pandemic. All essential daily use items, from toothpaste and soaps to cakes and cookies and even medicines, use flavours and fragrance to appeal to consumers.

Rishabh Kothari, president, Fragrances & Flavours Association of India (FAFAI) said, “Our palette is very large. We are one of the biggest exporters and importers of ingredients. Due to the prevailing logistics issues in the country, as inter-state transportation is either restricted or difficult, there is a substantial impact on our industry. If the situation is not improved quickly, there will be a huge economic cost for us. China will benefit from the situation as we may lose some of our global customers to the neighbouring country which will result in a significant business loss and market share for us”.

According to Kothari, amidst the pandemic it is difficult to accurately estimate the total quantum of losses, but he feels that production has been hit to an extent of 80% and exports and imports too have been similarly impacted. The growth of the industry, which was growing at over 10%, is likely to become negative both due to the lockdown during the pandemic and the consequent likely drop in demand for consumer products and processed foods in the rest of the year.

The ministry of micro, small and medium enterprises, government of India estimates the size of the Indian fragrances and flavours industry at around $500 million which is growing at 11% per annum while the global fragrance and flavour industry is valued at $24 billion.

There are over 1,000 small, medium and large size enterprises operating in this industry, both in organized and unorganized sector.

“It will take another 4-6 weeks to resume our operations completely even after the lock down is lifted. Supply of manpower will again become a major problem as most of them have gone to their native places. Hence, the government should bail out the industry by announcing an appropriate fiscal stimulus package which will stimulate demand rather than only a 3 month moratorium which favours the banks than the enterprises. Otherwise, the industry will acutely suffer apart from losing its competitive advantage in the global markets,” Kothari said.



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