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Essential oils are liquids that are generally distilled (most frequently by steam or water) from the leaves, stems, flowers, bark, roots, or other elements of a plant. Most essential oils are clear, but some oils such as patchouli, orange and lemongrass are amber or yellow in color. Essential oils contain the true essence of the plant it was derived from. The chemical composition and aroma of essential oils can provide valuable psychological and physical therapeutic benefits.

Spice derivatives include spice oils, spice oleoresins and essential oils that are put to various uses in different industries. Spice oils and oleoresins form an important part in our foods. The oleoresins present are the 'true essence of the spice' and consists of the volatile essential oil and the nonvolatile resinous fraction containing total flavour of the spice. Oleoresin can replace whole of ground spice in food and flavour formulations without spoiling any flavour characteristics. It has great advantages as compared to spices. Hence oleoresins are largely used for flavoring of food particularly by large scale food processing and flavoring industries like meat canning, sauces, soft drinks, pharmaceutical preparations, perfumery and soap, tobacco, confectionery and bakery. The demand of spice oils and oleoresins in the developed countries is increasing day by day as more and more spicy snacks are being introduced by fast food chains with standardized tastes. The spice oils and oleoresins are specially suitable for such snacks in that they can be used very conveniently (without any handling of the raw spice like ginger, chilli, onion, etc.) and producing a standardized effect on taste. This is the reason practically all plants in India, numbering to more than twenty five per cent exporting their products to these nations. The demand is increasing and more and more plants are being commissioned for 100% export. Spice derivatives are widely used in pharmaceutical industry, beverage industry, food processing industry and chemical industry.

The industrial sector consumed 55 per cent of the total usage of spices and herbs. The retail sector consumed 35 per cent of the total usage of spices and herbs.
The catering sector consumed 10 per cent of the total usage of spices and herbs. India's spices export has risen by 5% in dollar terms in December 2009 on an annualized basis. During December 2009, export of spices from India has been 29,850 MT valued Rs.408.06 crores (87.50 million US $) as against 31,375 MT valued Rs.404.89 crores (83.25 million US $) in December 2008. During December 2009, the spices, which have shown substantial increase in export, are Cardamom (Small), Chilli, Garlic, Nutmeg& Mace, Curry Powder and Spice oils and oleoresins, according to Spices board.

During April-December 2009, a total quantity of 358,205 MT of spices valued Rs.3953.74 crores (825.55 million US $) has been exported from India as against 366,100 MT valued Rs.4116.31 crores (926.95 million US $) during April-December 2008. Compared to last year, the export has shown a decline of 2% in volume, 4% in rupee value and 11% in dollar terms. The decline in spices export, which was in the range of 20% to 25% during the first two quarters of the financial year, has now come down to 2% to 4% as compared to the corresponding period of last year. The major spices exported during the period are Chilli, Mint Products, Spice oils & oleoresins, Cumin, Turmeric, Pepper and Coriander. The Spice oils & oleoresins including mint products contributed 34% of the total export earnings. Chilli contributed 23% followed by Cumin 10% and Turmeric 7%.

During April-December 2009, the export of Cardamom Small, Celery, Garlic, Nutmeg & Mace, Curry Powder, Other seeds and Misc. spices are higher in terms of both quantity and value as compared to the same period of last year. However, export of spices viz. Pepper, Cardamom (Large), Cumin, Fennel, Fenugreek, Vanilla, Mint Products and Spice Oils & Oleoresins have shown decline both in terms of quantity and value as compared to last year.

Coming to the perfumes and fragrances sector, market for perfumes and fragrances, as perceived in western parlance, is of a recent origin. The perfumes and fragrances market had remained confined to small quantities of scents, eau de colognes, deodorants and after shave lotions. Presently there are some 500 companies in the fragrance industry, for the small volumes, a little too many. The small scale sector is dominating the market. The unorganized market could be four times the size of the organized market.

The growth in demand for perfumes and fragrances over the last 15 years has been phenomenal. From a very small demand of 950 tonnes in 1990-91, it grew to 12,500 tonnes in 2000-01. The market for the product is estimated to have expanded by over 50% in three years to 18,300 tonnes in 2003-04. It is further expected to grow to 26,650 tonnes in 2006-07 and to 36,400 tonnes in 2009-10.

The organized sector is dominated mainly by the multinationals. The unorganized sector, with hundreds of units producing a large number of domestic concoctions, caters to the high upper-middle tier of the market for low price-end of products. The share of the small and informal sector is estimated at about one-third of the total market.

The Indian Spice oils and oleoresins industry is engaged in continuous innovation and upgradation of process and products to meet the new global demand.

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