What Happened
- India, once the world's leading producer of sandalwood, has been displaced by Australia as the top producer
- The Union Budget 2026-27 announced that the Centre will partner with state governments to promote targeted cultivation and post-harvest processing to revive the Indian sandalwood ecosystem
- India's annual sandalwood production fell from approximately 4,000 tonnes in the 1950s to a few hundred tonnes by the early 2000s
- The global sandalwood market is projected to nearly double between 2023 and 2030, growing at 9-10% annually
- The initiative aims to create an organised and profitable supply chain for farmers and traders through state collaboration in cultivation, monitoring, and post-harvest management
Static Topic Bridges
Indian Sandalwood (Santalum album) — Botanical and Economic Profile
Indian sandalwood (Santalum album) is a hemiparasitic evergreen tree native to the tropical dry deciduous forests of the Deccan Plateau, particularly Karnataka, Tamil Nadu, and Kerala. It is valued for its heartwood, which contains 4-7% sandalwood oil (santalol), used in perfumery, cosmetics, pharmaceuticals, and religious rituals. India's sandalwood is considered superior to Australian sandalwood (Santalum spicatum) due to higher santalol content.
- Sandalwood takes 15-20 years to reach commercial maturity; heartwood forms after approximately 10 years
- Sandalwood heartwood price: Approximately Rs 7,500/kg in domestic market
- Sandalwood oil price: Approximately Rs 1.5 lakh/kg; higher in export markets
- India's production decline: ~4,000 tonnes (1950s) to ~400-500 tonnes (2000s)
- Australia overtook India as world's largest producer, with plantations primarily of S. spicatum in Western Australia
- Karnataka, Tamil Nadu, and Kerala are the traditional sandalwood-growing states
- Sandalwood is a hemiparasite — it attaches to host tree roots for nutrients while also photosynthesising independently
Connection to this news: The Budget announcement acknowledges India's dramatic production decline and positions state collaboration as the pathway to reviving an industry where India once held global dominance.
Regulatory Framework — From State Monopoly to Liberalisation
Sandalwood in India was historically classified as state property, meaning the government owned all sandalwood trees regardless of whether they grew on private or forest land. This was enforced through state-level legislation, most notably the Karnataka Forest Act and related rules. The strict regulation, while intended to prevent overexploitation, paradoxically incentivised smuggling (most notoriously by Veerappan, who operated across the Karnataka-Tamil Nadu border from the 1970s to 2004) and disincentivised private cultivation.
- Before 2001-2002: Growing, cutting, and selling sandalwood by individuals was largely prohibited in most states
- Karnataka Forest (Amendment) Bill, 2001: Allowed farmers to grow and sell sandalwood on private lands — a landmark liberalisation
- Several states subsequently relaxed regulations: Tamil Nadu, Andhra Pradesh, and Kerala amended their forest acts
- Despite liberalisation, regulatory complexity remains: Transit permits, felling permits, and state-specific rules create compliance burdens
- Smuggling legacy: Veerappan's decades-long sandalwood and ivory smuggling operation highlighted the failure of prohibition-based regulation
- Indian Forest Act, 1927 (Section 41): Governs transit of forest produce including sandalwood
Connection to this news: The Budget's emphasis on Centre-state collaboration for cultivation and post-harvest processing recognises that regulatory liberalisation alone is insufficient — active government support in creating markets and processing infrastructure is needed to make sandalwood farming attractive for private cultivators.
Union Budget 2026-27 — Agriculture and Allied Sector Announcements
The sandalwood revival initiative is part of a broader agricultural push in the Union Budget 2026-27. The Budget also announced a scheme targeting coconut, cashew, cocoa, and sandalwood for global market competitiveness, as well as the AI-powered Bharat-VISTAAR platform for multilingual agricultural advisory. These reflect a shift toward promoting high-value, export-oriented agricultural products alongside traditional food security crops.
- Budget 2026-27 agricultural focus: Coconut, cashew, cocoa, and sandalwood promotion for global competitiveness
- Bharat-VISTAAR: AI-powered multilingual platform for farmer advisory
- Rare-earth corridors announced in Odisha, AP, Kerala, Tamil Nadu (related to critical minerals, not agriculture)
- Budget emphasises collaboration with states rather than direct Central implementation — aligning with cooperative federalism
- Agriculture is a State subject (Entry 14, State List, Schedule VII); Centre's role is primarily through CSS (Centrally Sponsored Schemes) and budgetary support
Connection to this news: The sandalwood initiative fits within the Budget's broader strategy of promoting high-value, export-oriented agricultural products where India has natural advantages but has underperformed due to regulatory and infrastructure constraints.
Key Facts & Data
- India's sandalwood production: ~4,000 tonnes (1950s) to ~400-500 tonnes (early 2000s)
- Sandalwood heartwood price: ~Rs 7,500/kg; oil ~Rs 1.5 lakh/kg
- Global sandalwood market: Projected to nearly double between 2023 and 2030 (9-10% CAGR)
- Tree maturity: 15-20 years; heartwood forms after ~10 years
- Santalum album: Hemiparasitic evergreen; native to Deccan dry deciduous forests
- Karnataka liberalised private sandalwood cultivation in 2001
- Australia is now the world's largest sandalwood producer (primarily S. spicatum)
- Approximately 130,000 mature sandalwood trees remain across Karnataka, Tamil Nadu, and Kerala