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The Centre has focused its attention on sandalwood in the Union Budget 2026 tabled on February 1 and is set to take multiple steps for boosting its cultivation in a bid to increase farmer incomes.
During her budget speech, Union Minister of Finance Nirmala Sitharaman announced that sandalwood is closely linked to India’s social and cultural heritage. She added that the Union government will partner with state governments to promote focused cultivation and post-harvest processing so that the glory of the Indian sandalwood ecosystem can be restored.
K Amaranayana, retired IAS and president of the All India Sandalwood Tree Culture Association, said the budget announcement would encourage farmers.
“We are grateful to the central government for bringing out the Sandalwood Development Committee Report, treating sandalwood as a farmers’ produce, besides making an announcement in the budget and giving a big boost to sandalwood development in the country,” he said.
Amaranayana said a number of consultations and requests had been made to the local Members of Parliament and central government ministers, recommending an easing of conditions that allow cutting, sale and marketing of sandalwood.
“These recommendations have been accepted and now we are in consultations with state governments to formulate a policy to proceed with training, marketing and increasing production by farmers,” he said.
Sandalwood farmers have long been demanding quality planting material for high density sandalwood in their farms. Promotion of sandalwood, credit insurance and plantation security from illegal logging, pests and diseases are some challenges that Indian sandalwood farmers experience.
A Down To Earth story from 2025 highlights the challenges faced by farmers, some of which include restrictive regulations designed to curb illegal trade that poses a big risk for farmers.
In September, the Karnataka High Court also directed the state government to formulate guidelines for compensation.
The cost of Indian sandalwood for Class I heartwood (high quality) stands at Rs 7,500 per kg and oils are priced at Rs 1,50,000 per kg, according to the government. International market rates are 15-20 per cent higher than domestic rates.
According to central government estimates, the global sandalwood market was valued at $265.8 million in 2023 and is expected to rise to $502.2 million by 2030 - an increase of Compound Annual Growth Rate 9.4 per cent between 2024 and 2030.
