Asafoetida, or hing as it is popularly known, has been a darling of almost every Indian kitchen since ages. What's more? Its recently found use as a product of medicinal value is driving its demand higher. And since India does not produce enough asafoetida to meet domestic demand, its imports makes for a lucrative business proposition.
By Anishaa Kumar | July Issue 2017 | The Dollar Business
The delicious fragrance of hing that originates from the kitchen is invariably intoxicating. Those who've experienced it can swear by this fact. But did you know that hing, or asafoetida as it is otherwise known, the key ingredient of many of our lip-smacking snacks, is a product that is almost entirely imported from Afghanistan? Hing, the spice in that tiny bottle in your kitchen, is a dried latex made from a plant called Ferula Assa-foetida that is native to Afghanistan, though its cultivation has now spread to many of Afghanistan's neighbours like Tajikistan and Uzbekistan. And while until recently Indian kitchens have been using asafoetida (which has a signature pungent smell) only as a spice to add flavour, the product is now also being used in various other food and healthcare products as people become more aware of its medicinal values.
Rising Popularity
India currently consumes 40% of the world’s total production of asafoetida, and its imports too have been on a steady climb. So, what is driving the demand for asafoetida in India? Navroz Khan of Hindustan Hing Supplying Company, an importer based out of Nadiad in Gujarat, says, “People in India have become very health conscious. The awareness about asafoetida and its medical benefits is spreading fast and that’s why the demand is also on the rise. Many believe that hing helps in curing respiratory problems, including bronchitis and asthma. It is also used for treating digestive problems including intestinal gas and irritable bowel syndrome (IBS). Scientists have found evidence that chemicals in asafoetida might help treat IBS, apart from protecting against high levels of certain fats including cholesterol and triglycerides in blood – coumarins, the chemical present in asafoetida, can thin the blood. Naturally, many companies that used to sell only spices and ayurvedic products have now started selling asafoetida.”
While the product is finding increasing usage in India, asafoetida cannot be grown in most parts of India as the climate does not suit the plant. The government has tried to promote its cultivation and has found a small degree of success in cultivating the plant in some parts of Kashmir, but its commercial production so far has been negligible. Naturally, imports is the only option. Abhishek Purwar, a Kanpur-based importer of asafoetida, says, “Asafoetida is like gold!” He explains, “Asafoetida is expensive. But in India, the demand for asafoetida, just like gold, is always on the rise.”
Punit Gambhir, Owner of Jagdish Gambhir Hingwala, echoes similar sentiments. “India is the largest importer of asafoetida in the world and that is because asafoetida is used both as a spice and a product with many medicinal values. And as, such its imports is bound to grow going forward,” says Gambhir. Data from the Food and Agriculture Organisation of the United Nations (FAO) too shows that India’s imports of asafoetida have been growing on an average of 500-700 metric tonne (MT) per year.
In fact, between FY2007 and FY2016, imports increased 84.26%, leaping from $16.52 million to $80.16 million. And as for FY2017, import stood at $89 million.
Of Origin & Quality
Who could be satiating India’s appetite? “Quality of asafoetida differs from region to region. Asafoetida from Mazar-e-Sharif (Afghanistan) is the best suited to make compounded asafoetida or the spice hing because of the distinct colour, smell and taste,” explains Gambhir. And since India is the largest consumer of compounded asafoetida in the world, Afghanistan is the most desired sourcing destination.
Ramesh Kumar Mariappan, Owner of Chennai-based Sun Industries, agrees, “The demand for raw asafoetida in the domestic market is limited as compared to compounded asafoetida. Most large manufacturers use compounded asafoetida.” But that does not mean asafoetida from other countries is bad. In fact, the other varieties are used as ingredients in several healthcare products.
The two most common varieties of asafoetida used in India are red and white. The white asafoetida, native to Afghanistan, is water soluble whereas the red asafoetida, found in other countries, is oil soluble. So, while India also sources from countries like Iran, Tajikistan and Uzbekistan, it is Afghanistan that is satiating India’s appetite. In fact, in FY2017, about 92% of India's imports of asafoetida was from Afghanistan.
EXPORT Twist
Interestingly, most Indian importers prefer to source raw asafoetida. And the reason is simple. It's cheaper and more convenient to procure raw asafoetida and convert it into compounded asafoetida. Also, since most importers are also manufacturers themselves, they get the opportunity to export a small share of compounded asafoetida.
In FY2017, the exports value of compounded asafoetida from India was only $8.56 million. However, the year-on-year growth has been decent. And this is perhaps another revenue stream that importers of raw asafoetida can explore.
According to exporters of asafoetida, the growing Indian diaspora across the world is fuelling the demand. And it's quite true because wherever the Indians migrate, spices is one of the items that keeps them connected to the home country. Currently, UAE and US are the largest export destination, but markets such as Australia, Canada, Kuwait, Singapore and Myanmar are slowly catching up. And our exporters are very positive that exports demand will only continue to grow in the future.
In addition, the government is trying its best to increase domestic production. “If the government can do something to reduce the imports, it will stabilise the price of asafoetida and we can also focus on exports because the price will become more competitive,” says Khan.
Spoilers
Cultivating the plant sure would be beneficial, as importing asafoetida comes with its peculiar set of contraints. “In the 1990s, doing business with Afghanistan was difficult because of the political instability in the country. Exporters had to temporarily move their operations to Peshawar in Pakistan and use Karachi port as an exit point. But, now things have changed,” says Khan.
Despite presently enjoying relative stability ("relative" is the key word here), sourcing from Afghanistan continues to be a challenge as it's a landlocked country. Indian importers have to rely on air cargo which adds to their costs. “Consignments from Afghanistan can be transported to India through Pakistan, but because of the cross-border conflicts between the two countries most importers try to avoid this route,” says Khan.
Spreading Across
So, how does the way-forward look like for Indian importers of asafoetida? Well, importers are certain that the imports of asafoetida will continue to grow in the foreseeable future, particularly from Afghanistan as asafoetida imports from the country enjoy zero customs duty (thanks to the preferential trade agreement between India and Afghanistan). And, that's not the only reason. Despite the growing competition, this is a market that always welcomes new players – though industry insiders caution that it is imperative to understand the quality of the product and its many uses to succeed in this business.
Moreover, today, connecting with exporters has become easier than ever. “WhatsApp and Skype have become a common medium to communicate. Exporters now also come to India looking for new buyers, which wasn’t the case earlier. At times, language can be a barrier, but they usually bring a translator along,” says Gambhir. And as far as transportation is concerned, many importers are now routing the consignments through Chabahar Port in Iran, which works out more economical and in turn improves their profit margins.
Asafoetida or hing typically works as a flavour enhancer and is an important ingredient of Indian cuisine.
With the use of asafoetida on the rise, both as a spice and as medicine, and imports being the only option to satiate India's growing demand for hing, its importers are bound to prosper. Asafoetida - some product that...one that's common but an idea so special!
TDB: How has import business of asafoetida in India evolved over the years?
Navroz Khan (NK): Earlier, asafoetida was imported collectively – a group of traders would import the product to Mumbai port and distribute it. There was a time when a direct conversation with an exporter was near impossible. But after 1994 the scenario has changed and I have been directly sourcing from Afghanistan and Iran – countries that are also the largest exporters of asafoetida in the world. Now exporters come to India and meet even the smallest of buyers.
Over the years, the government has tried various methods to grow the plant domestically but the efforts have not been successful. With the rise in demand, Indian importers have started to import asafoetida or hing from countries like Tajikistan, Uzbekistan, Kyrgyzstan and Russia too.
TDB: Why has the demand for asafoetida increased in India?
NK: India now imports tonnes of asafoetida because people are more health conscious now and are becoming aware of the product’s medicinal value. Asafoetida offers many medical benefits and there are many companies that use asafoetida in their products – and that fuels the demand. I would however want to see the Indian government take more interest in producing asafoetida domestically, as it’s a very expensive product.
TDB: What are the major challenges that importers of asafoetida face?
NK: Competition is on the rise and it does eat into our margins. Also, the government has little or no interest in the product. Many traders hoard the product to artificially increase the price, and this is something the government must address urgently. For instance, recently, the price increased by Rs.2,000 per kg as there was a panic among importers because of a rumour that the Tajikistan government has imposed a ban on exports of asafoetida.
Other than that, we do not face any major challenges. Anyone can become an importer with ease because importing is easy and there are no duties. Interestingly, even farmers in Afghanistan have become exporters themselves and deal in both bulk and customised orders. But anyone who wants to be in this business must bear in mind that asafoetida isn’t a product that one can hold in stock for long or sell overnight.
TDB: Is it true that India imports mostly raw asafoetida?
NK: Yes, we import asafoetida in raw form, and then process, rebrand and sell it. But, there is demand for both pure and compounded asafoetida, as both are consumable. As far as pricing is concerned, the difference can be huge based on the quality and can range between Rs.5,000 and Rs.15,000 per kg. Every region grows a different quality of asafoetida and their smell, colour, etc., differ. One interesting fact is that Afghan asafoetida is no longer considered the best. Asafoetida from Tajikistan is considered to be of a better quality.
TDB: Afghanistan is India's preferred source of asafoetida. Doesn't the political instability and the constant strife in the country impact importers?
Punit Gambhir (PG): Although we have been in the business for the last 4-5 decades, we started importing asafoetida only in the mid-1990s. We initially started by importing from Pakistan and later on started sourcing from Afghanistan, but only after the US offensive in Afghanistan was over and there was a semblance of stability in the region.
Now there is no problem in doing business with Afghanistan. Consignments can be shipped via air to Iran then to India via sea or directly via air from Afghanistan to India. One can also use the roadways, but since the consignment would then have to travel through Pakistan, we prefer bringing it via Iran.
TDB: How lucrative is the business?
PG: India imports around 25% of the world’s asafoetida. So, there is a huge demand for the product. There are different varieties of asafoetida that are available and its usage in the industry depends on the quality. Quality in turn depends on where the particular variety of asafoetida is grown. For instance, asafoetida from Mazar-e-Sharif (Afghanistan) is used to make compounded asafoetida, while asafoetida from other regions are used for other purposes. But despite the differences in quality, we aim to maintain a healthy margin across variants.
TDB: Why does the price of asafoetida fluctuate so much?
PG: India cannot cultivate asafoetida because the climatic and soil conditions aren’t suitable. And, this has an impact on the price because we pay what the exporters demand – we are not in a position to bargain. In addition, prices go up when the regions in Afghanistan that produce asafoetida face droughts, and as you know droughts are unpredictable. Otherwise, this is an inexpensive product and depending on the variety, price can range from Rs.2,000 to Rs.10,000 per kilogram.
TDB: Is it easy to find exporters? Do you think this could be a viable business for budding entrepreneurs?
PG: Since we have been in this business for a long time, we do not face any problem contacting sellers. However, in most cases, buyers and sellers find each other through their respective embassies. Of late, exporters are also coming to India to look for new buyers. This wasn’t the case earlier. While language can become a problem at times, exporters usually bring a translator along with them.
And to answer your second question, this is a niche sector. The success of the business will mostly depend on the level of product knowledge one acquires. An importer should know how to check the purity of the product, as well as which industry uses which quality of asafoetida. And it’s only when one knows all these differences, one should enter this business. And perhaps, this is one of the reasons why there aren’t many asafoetida importers in India.
Copyright @2024 The Dollar Business. All rights reserved.
