Medicinal Plants & NTFP Trade Study in India

The Covenant Centre for Development (CCD)

With the support of the Christian Aid
June 2013
Dr. Utkarsh Ghate & Pradip Dube,
CCD, Durg, Chhattisgarh

SUMMARY
Medicinal plants sector is famous as a mullti million dollar growth option yet the
farmers cry of not getting the market or fair price industries too ironically complain
of shortage of raw material & its poor quality. It can provide decent livelihood
options to millions of semi-illiterate & unskilled villagers subsisting in poverty on the
forest margins, if developed properly. However, infamous initiatives like the failed
Safed Musali propaganda have risked the credibility of the sector. So it was needed
to do fact finding of the sectoral potential for sustainable growth for the poor in the
forest margins/ dry lands.
Hence, CCD, an NGO working across 4 states in central & southern India conducted
a nationwide sample survey of medicinal plants & NTFP trade in first half of 2013 in
13 states & Delhi across India in collaboration with 13 local NGOs. It surveyed
about 300 gatherers/farmers, 100 traders & 10 companies were surveyed. NTFP
(non timber forest produce) were also summarily studied as they support 10-20
more people & offer much more potential for sustainable growth. Best practices in
Silk, Lac, Leaf plates- Brooms, Gums-resins product lines are documented for
replication.
It is estimated that medicinal plants trade is about 250,000 ton/year worth Rs.
1,000 crore. About 50% of it is Isabgol in volume, but just 20% in value. The trade is
growing slowly in the past few years due to other competing livelihood option in the
villages such as the employment guarantee schemes.
The top species by volume are Isabgol, Amla, Giloy, Bala, Harda & Beheda.
The top species by value are Isabgol, Atish, Amla, Giloy, Satavar & Ashwagandha.
The most priced species are Atish, Guggul, Kutaki, Chirayata, Banapsha, Pipali,
Kalihari.
Most exported species include Isabgol, Senna, Henna, Myrobyloans & Karaya gum.
The share of cultivated species in the trade is 15 % by volume 20 % by value. There
are Isabgol, Ashwagandha, Aloe vera (Kumari), Pashanbhed (Coleus), Kalmegh &
Safed Musali.
Rajasthan, Madhya Pradesh, Chhattisgarh, Himachal & Uttaranchal are leading
producer states while Kerala, U. P., Maharashtra, Tamilnadu & Gujrat are leading
consumer/ importer states.

There is need to promote few clusters for bulk production on contract with
industries of species in high demand & price/ imported today viz. Isabgol, Guggul,
Mulethi, Ashwagandha, Satavar, Atish, Pipali, in Rajasthan, M. P., Uttaranchal/
Himachal states to be a viable enterprise with Rs. 2.5 million seed grant.
The benefits of investing in developing good collection-agriculture & contract
production include Rs. 10,000/- to 50,0000/- per family to gatherers or farmers
respectively, which is 2-3 times their present earning from medicinal plants/ NTFP.
Industries will also get quality raw material at fair price.

INTRODUCTION
Medicinal plants sector is famous as a mullti million dollar growth option yet the
farmers cry of not getting the market or fair price industries too ironically complain
of shortage of raw material & its poor quality. Even prior contracts for production
have failed from both the buyers & sellers in some cases, making the sector a risky
business. Most of the raw drugs are still collected from the forests at poor price from
remote, backward area hardly paying wage rates. Thus, cultivated material prices
stay much higher due to the labor & input (seed, fertilizer, medicines) cost & the
land rent. So farming is often uncompetitive except few exotic or rare species that
are not available in the wild e.g. Coleus, Vinca, Senna.
It is said that Indias share in the global herbal market is just 1% & there is huge
growth scope it organic & phyto/sanitary standards are adopted. It is sad that India
has also started importing hugely items earlier wild here like Satavar (Nepal), Honey
& Guggul (Pakistan). So it is imperative to develop clusters to produce such items in
short supply & sell locally or export. It is necessary to identify items in read demand
that industries could invest in for production & avoid the type. For this purpose, CCD
initiated a national level study of medicinal plants trade. Herbs area component of
Non timber forest produce (NTFP) which has much bigger 20 times market size &
poverty alleviation potential through products of growing demand & price e.g. forest
silk, lac, honey, gum so it is also included.
METHODOLOGY
For assess medicinal plants trade per each state, 3 districts known to be of high
potential/status were selected. Totally 14 states were selected where CCD had its
presence/reliable, capable NGO partners
South A.P., T.N., Kerala, Karnataka
Central
Maharashtra, Chhattisgarh, M.P
North Rajasthan, Uttaranchal, Himachal, U.P, Delhi
East Orissa, Jharkhand.
CCD did the study it self in TN while also associated 1 NGO each in Maharashtra,
Chhattisgarh & M.P states. It engaged the following NGO partners other states (See
Table 1 in the Annex).
In each district 2-3 villages of the forest margins were studied & minimum 3-4
gatherers per village, totally per district & 30 per state. About 10 traders per state &
5-10 successful farmers per state were also studied besides 3-5 companies using
medicinal plants as raw material. The companies surveyed in all include
Delhi Dabur
Mumbai/ PuneDhutpapashwar, Sharangdhar, Rasashala, Khadiwale
A.P
Chemeloides
Karnataka- Himalaya, Natural Remedies, Sadvaidyashala
ChhattisgarhPavan Herbs

Question formats were developed & filled for the above types of stakeholders,
totaling 400.

Table 1- State wise partner NGOs

STATE

OGNANISATION

Team leader

AGAS

Mr J P Maithani

2. Himachal

Abilashi College,
Lokvigyan

Prof. Suresh, Mr Prakash

Bhandari

3. Rajasthan

Jagran

Dr G P S Jhala

4. Madhya Pradesh

Vrunda

Ms Tripti Singh

5. Uttar Pradesh

Samarpan

Mr Radheshaym

6. Chhattisgarh

Vaidya Sangh

Mr Nirmal Awasthi

7. Jharkhand

Rudra

Mr Shahid Ashraf

8. Orissa

Prakruti

Mr Bismaya Dalei

9. Maharashtra

CCD

Dr Mandar Akkalkotkar

10. Karnataka

LIFE

Mr Narsimha Hegde

11. Andhra Pradesh

CAFED

Mr Showri Raju

12. Tamilnadu

GMCL

Mr John Britto

13. Kerala

ESPCL

Mr Benjamin

1. Uttarachal

Delhi- Jiya Jyoti foundation.

RESULTS
In each state about 5-10 person/village only are involved in medicinal plants
collection, which is 10-20% of the NTFP gatherers. About 10,000 forest margin
villages occur per state on average implying, 100,000 (one lakh) gatherers/state.
There are mostly from the scheduled tribe caste/OBC (other backward caste)
Category & below poverty line. For, other social groups are engaged in less
treacherous more rewarding occupations. In all 1.5-2 million people may be
engaged in the country in medicinal plants collection, while 15-20 million i.e. 1.5-2
crore in NTFP collection. This implies 10 million i.e. 1 crore medicinal plant gatherer
family population, while 10 crore i.e. 100 million NTFP gatherer population, at 5
members/ family average
Boxestimate.
1- Producer Profile
Village- 10-20, District- 10,000
State- 100,000, Poor, under-privileged- ST/ OBC/ SC
Rs. 3,000- Rs. 10,000/- per year income/ family/ year
About 5-15% of NTFP based income, 3-10% of total
income
Mainly Large farmers in cultivation of herbs today,
not small ones

Thus about 50% of the ST population is engaged in the sector. There is much
overlap in the medicinal plants & NTFP gatherers & the farmer is a subset of the
latter except in dry lands where no forests exist. The benefit of medicinal plants
over NTFP for the poor are (a) found outside forest (b) can be grown for yield soon
(4 months- 2 years).
Income per gather family from the medicinal plants trade is Rs. 1,000/- on
average/season or year which is 10-20% of NTFP based income (Rs. 4,500/- per
family/ year). This implies Rs. 200 crore/year income to villagers. However, its value
at the market level is Rs. 600-800 crore/year due to 3 times markup from village to
metros. Isabgol sector worth Rs. 200 crore, when added to it, the total is Rs. 1,000
crore/year.
Fig. 1- Income share of herbs & NTFP for the producers
Herbs; 1000; 5%
NTFP; 4000; 20%
Labor; 9000; 45%

Farming; 6000; 30%

Note- the share of medicinal plants can be grown 3-4 times by value addition,
cultivation while that of the NTFP can be gown to double the present value by
similar means. This could raise the present income of the forest margin families
from Rs. 20,000/ year today to Rs. 50,000/- in 3-4 years, by 20% investing.

Box 2- Trade estimate

State- 20,000 ton
Country- 200,000 ton
Average Price- Rs. 30/kg
Value- Rs. 600 crore/ year/ nation
Rs. 30 crore/ year/ state
FRLHT- 2007- 176,000 ton val. 440 crore, NMPB- Rs. 433
crore (web-site- till 2010), NBRI- Rs. 1,000 crore, 2008

State wise estimate of trade is as below Kerala, Maharashtra, Gujarat, U.P. & W.B are
consumer states while the rest are producer states. Thus, the raw drug supply could
be 9 states 15,000 ton = 135,000 ton/year. The 4 consumer states also produce
5,000 ton of raw drugs each, on average, totaling 20,000 ton, leading grand total
for production as 155,000 ton. To this, Isabgol production of 100,000 ton can be
added, resulting in the national production round figure of 250,000 ton.
Box 3- State level trade estimates
Maharashtra- 18,000 ton, Rs. 25 crore, MAPSCON, 2008
Kerala- 20,000 ton- Sasidharan & Muralisharan (KFRI), Rs. 40
crore, 2009
Orissa- 15,000 ton, Rs. 10 crore, Rath (Vasundhara NGO), 2007
Himachal Pradesh- 10,000 ton, Rs. 10 crore, Nandi, R. (IIST),
2008
Fig. 2- State wise trade estimate
Exporter states
Ton/yr

Importer states
Ton/yr

Bihar

West Bengal

Jharkhand

Maharashtra

Orissa

Gujrat

Himachal
Uttaranchal

U.P.

Chhattisgarh

Tamilnadu

M. P.
Rajasthan

Kerala
0

100000 200000
0

100002000030000

Note- about 95,000 ton of Isabgol seed is exported out of India in husk form (20,000
ton), so not seen in consumer states total.

Fig. 3- Main herbal species in Trade Rs. Crore/ yr

250
200

200

150
100

88
56

50

40 36 35 35

30 25 25 23 23

20 20 20 18 18 18 16 15

The top species by volume are Isabgol, Amla, Giloy, Bala, Harda & Beheda (10,000
ton & above/ year).
The top species by value are Isabgol, Atish, Amla, Giloy, Satavar & Ashwagandha
(Rs. 50 crore+/ year).
The most priced species are Atish, Guggul, Kutaki, Chirayata, Banapsha, Pipali,
Kalihari (Rs. 125+/ kg).

Most exported species include Isabgol, Senna, Henna, Myrobylans & Karaya gum
(Rs. 25 + crore/year).
Box 4- Export scope
There is much talk of huge export potential. Much of current export
consists of isabgol & bit of it is Senna. Some other species in demand
are Andrographis, Coleus, Gloriosa, Mucuna, Vinca, Ravolfia & Stevia,
the last being health food than medicine. But their total share in the
trade is just 15% and can grow only with prior contracts.
The share of cultivated species in the trade is 15 % by volume 20 % by value. There
are Isabgol, Ashwagandha, Aloe vera (Kumari), Pashanbhed (Coleus), Kalmegh &
Safed Musali.

Fig. 4- Share of parts harvested

Leaf; 4% Gum/resin; 1% Whole; 1%

Root; 5%
Bark; 1%
Seed; 50%
Branches; 13%
Fruit; 25%

Note- This is different from the belief that majority of the species are harvested for
plants whose extraction damages the plants such as root, bark, based on no. of
species of part wise harvest. The above data represents the volume share traded
species based on part used, Isabgol in the lead, followed by Amla, Harda & Beheda,
with Giloy (branches) & Senna (leaf) next. This implies medicinal harvest is not so
harmful as thought before as seed, fruit, branches regenerate soon, while even bark
& root do so slowly.
Fig. 5- Share of forest & other habitats in herbal trade

Habitation; 5%
Farms; 13%
Wasteland; 13%
Forest; 70%

Note- This is different from the belief that forest as home to 80% or more herbs.
The benefits of investing in developing good collection-agriculture & contract
production include Rs. 10,000/- to 50,0000/- per family to gatherers or farmers
respectively, which is 2-3 times their present earning from medicinal plants/ NTFP.
Industries will also get quality raw material at fair price. However, for this purpose,
the above species must be focused & not Safed Muslai or Aloe vera as many did &
failed earlier.

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Fig. 6- Main markets share

Fig. 7- Trade share by user

categories

Healers; 5%
Export; 24%

Tuticorin; 1300; 6%
Mumbai; Bangalore;
5000; 23% 5000; 23%
Kolkatta; 4000; 19%
Chennai; 3000; 14%
Hyderabad; 900; 4% Delhi; 2200; 10%

Small Industry; 48%

Corporate; 24%

Note- This is FRLHT data (2006) but we do not find much change. It does not include
the growing secondary markets such as Raipur/ Dhamtari, Neemuch, Katani,
Amritsar, Kanpur (Hathras) etc.
Its total is about 20,000 (twenty thousand) ton, which is just 10% of the total trade.
This indicates that 90% of the trade is occurring bypassing the metro markets- from
villages to urban industries/ exports due to well organized supply chain/ cartels of
producer-traders-buyers.

The raw drug trade value of Rs. 1,000 crore is about 7% of the herbal industry
turnover in India including traditional medicine, estimated at Rs. 15 billion/year
(NBA, 2013). The 13 industries studied spend 5 to 10% of their expenses on raw
drug procurement averaging 20-30 ton per Rs. 1 crore turnover, as learnt from the
sample of 10 industries studied.
There are about 8,000 traditional pharmacies in India only 600 of them are
members of ADMA (Ayurvedic Drug Manufacturing Association) only 50 of them
have annual turnover of Rs. 10 crore or more, and just 10 over Rs. 100 crore T/O
annually such as Dabur, Emami (Zhandu), Baidyanath, Himalaya & Natural
Remedies. The annual raw drugs requirement of the pharmacies could be as below.
Table 2 Industry demand estimate
Turnover
Annual
a) Very big

>Rs. 100
crore

Raw Drug
need Ton/
year
2000

No.
of
Co.s
10

Total
ton/year
20,000

11

b) Big
c) Small
c) Micro

Rs. 10 crore
Rs. 1 crore
< Rs. 1 crore

100
25
10

40
550
7,50
0

4,000
13,750
75,000

112,750
Note- Add to this 7,500 ton of raw drugs used by the healers and 100,000 ton
isabgol (mostly exported).
This indicates that just 35% of the raw drug trade is due to the organized sector &
65% is by the local, small unregistered units. In the study of Chhattisgarh state,
Ghate et al (2012) estimated consumption by the healers as just 5% of the trade. It
could be thus 7,500 ton it total country, implying 120,000 ton/ year as domestic
demand, of raw drugs produced in the country. To this must be added imported
drugs like Guggul, Mulethi & even honey, a major ingredient in Ayurvedic medicines,
now also imported.

Box 5- Business Status & scope

Industries- 65% (corporate- 25%, SME- 40%), exports- 15%,
Healers- 5%
Non-medicinal uses also prevail- e.g. Harda, Charota (tanning)
Value addition scope- Storage (delayed marketing)- 15%, Semiprocess- 15%,
Future- Support price- TRIFED, RIDF- rural infrastructure
Box 6- Price mark- up bubble
The market price at metros is 2-3 times the village (ex-godown) price. This
has tempted researchers/ NGOs to claim & resent unfair exploitation &
huge profit cornering by the traders. This is however not much true.
Storage, transport to godown & buyers, packing, loading, insurance or
loss on fire, evaporation, rejection/ debit note, price crash etc. eat away
much of the margin. NGOs entering in the business thus often make loss
& loan repayment seems hard. Most traders compete due to the family
capital or supplies credit. So the gain is in value addition not mere trade

12

DISCUSSION
The Ayurvedic/traditional industry share in the drug market in India was just Rs. 5%
about 2 decades ago. Today it is 20% i.e. Rs. 1.5 billion (traditional medicine) of Rs.
8 billion (drug industry). This growth indicates greater future demand. Such growth
is causing raw drug shortage & substitution or imports e.g. Honey, Guggul, Satavar.
Hence, there is business opportunity to grow these & supply to the industry on
contract. Extracts export is a hugely growing sector e.g. Kalmegh, Gudmar,
Kewanch etc. Growth of Japanese mint (Mentha) in U.P. as an example of India on
importer turning into an exporter similar success can be attempted for species of
high demand & price e.g. Ashwagandha, Atish, Bach, Gudmar, Baibidang, Kewanch,
Makoy, Nagarmotha, Satavar.
Box 7- Cultivation scope
Minimum essential- Rs. 30/- kg price viable, 3-5 quintal/ acre
Only inter-cropping is successful e.g. orchards, not pure
herbal crops
Allover- Kalmegh, Gudmar, Ashwagandha, Bach, Satavar
North- Atish, Kutki, Chirayata
West- Tulsi, Kewanch, Bramhi, Chitrak, Henna, Isabgol
South- Sarpagandha, Gloriosa, Coleus, Senna, Vinca
Rarity of forest plants may not hamper the industry growth much due to the
permitted substitute e.g. Nagarmotha for Atish (but pharmacopeia standards may
need to be changed in some cases) or imports or majority of the bulk drug needed
are cultivated species e.g. Haldi, Amla, Bael,. However, Government needs to do
quality check up & adherence to Good Manufacturing Practice (GMP) code & charge
fine than unit closure to ascertain use of the genuine/permitted raw drugs to ensure
its demand & fair price.
NREGS has reduced raw drugs collection but it can be used agri-processing
including of herbs or well digging for herbal farming. Medicinal plants are suitable
lands that the tribal there grow on poor soils prone to wildlife damage to grow of the
degraded forest got in Forest Rights Act, 2005. For, drought resistant & less such
contract production can improve the life of 50 million tribal. However, to do so
model projects must be started in 4-5 poor states to publish species guide books in
local language contracts with industry, Agri-university support quality certification
etc.
Box 8- Cluster development- step wise process
1. Corporate (market) & scheme (backward) tie up e.g.
NABARD- UPNRM (natural resource management)/
PODF (producer organisation development fund)
2. Training kit, programs
3. Basic Infrastructure Set up
4. Trial production
5. Feedback & up-scaling
6. Dissemination & replication

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Box 9- Priority states & species (in demand/ shortage)

1) WEST- Rajasthan- Guggul, Isabgo, Henna, Mulethi
2) HIMALAYA- Uttaranchal- Atish, Bankakadi, Daruhaldi,
3) NORTH- U. P., M. P. (north-west)- Ajjwain, Mentha, Guggul, Salai,
Beeja
4) CENTRAL- Jharkhand, east M. P.- Satavar, Kalmegh, Giloy,
Nagarmotha, Bael, Arjun, Kutaj
5) EAST- Chhattisgarh, Orissa- Bach, Sarpagandha, Coleus, Seeta
Ashok
6) SOUTH- Coleus, Kalihari, Vinca
As per CCD experience of incubating GMCL in TN & Ujjwal small sale Industry (SSI, in
Amaravati, Maharashtra, that sells Rs. 50 lakh worth Pipali/year to Dabur co.), it
would need about Rs. 25 lakh/ site over 2-3 years to develop a medicinal plants
cluster. This can be invested partly from NGO grants, rest from Industry investment,
government schemes like NREGS or NMPB, suppliers credit etc. Potential species &
sites for this purpose are inbdicated in Box 9.

Acknowledgements
NGO partners & Christian Aid- Mr. John Suresh
CCD- Mr. Muthu Velayutham, Mr. John Britto
CGSMPB, UNDP, FRLHT- support, guidance, feedback
Market Demand- Dabur, Natural Remedies, Himalaya,
Dhootpapeshwar Co.
Review- Dr. Mandar Akkalkotkar, Dr. S. P. S. Bisen, Mr. Basav

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