India is the world's main incense producing country, and is a healthy exporter to other countries (though export sales have been troubled by increasing costs of the raw materials, and by other factors, such as Western countries buying unperfumed sticks, and by Indian companies producing fakes or imitations). Incense burning has taken place in India for thousands of years, and India exported the idea to China and Japan, and other Asian countries.
The main method of burning incense in India is the incense stick or agarbathi. The basic ingredients of an incense stick are bamboo sticks, paste (generally made of charcoal dust or sawdust and joss/jiggit/gum/tabu powder – an adhesive made from the bark of litsea glutinosa and other trees), and the perfume ingredients – which traditionally would be a masala (powder of ground ingredients), though more commonly is a solvent of perfumes and/or essential oils. After the base paste has been applied to the bamboo stick, it is either, in the traditional method, while still moist, immediately rolled into the masala, or, more commonly, left for several days to dry, and then dipped into the scented solvent. Various resins, such as amber, myrrh, frankincense, and halmaddi (the resin of a tree) are used in traditional masala incense, usually as a fragrant binding ingredient, and these will add their distinctive fragrance to the finished incense. Some resins, such as gum Arabic, may be used where it is desirable for the binding agent to have no fragrance of its own. Halmaddi has a particular interest to Western consumers, possibly through its association with the popular Satya Nag Champa. It is an earth coloured liquid resin drawn from the Ailanthus triphysa tree; as with other resins, it is a viscous semi-liquid when fresh, it hardens to a brittle solid as it evaporates and ages. Some incense makers mix it with honey in order to keep it pliable. Due to crude extraction methods which resulted in trees dying, by the 1990s the Forest Department in India had banned resin extraction; this forced up the price of halmaddi, so its usage in incense making declined. In 2011, extraction was allowed under leasing agreements, which increased in 2013, though production is still sufficiently limited for the resin to sometimes be stolen via improper extraction to be sold on the black market.
The oldest source on incense is the Vedas, specifically, the Atharva-veda and the Rigveda, which set out and encouraged a uniform method of making incense. Although Vedic texts mention the use of incense for masking odours and creating a pleasurable smell, the modern system of organized incense-making was likely created by the medicinal priests of the time. Thus, modern, organized incense-making is intrinsically linked to the Ayurvedic medical system in which it is rooted. The method of incense making with a bamboo stick as a core originated in India at the end of the 19th century, largely replacing the rolled, extruded or shaped method which is still used in India for dhoops and cones, and for most shapes of incense in Nepal/Tibet and Japan. Other main forms of incense are cones and logs and benzoin resin (or sambrani), which are incense paste formed into pyramid shapes or log shapes, and then dried.
The oldest source on incense is the Vedas, specifically, the Atharva-veda and the Rigveda. Incense-burning was used both to create pleasing aromas and a medicinal tool. Its use in medicine is considered the first phase of Ayurveda, which uses incense as an approach to healing. Incense-making was thus almost exclusively done by monks.
The specific knowledge of incense as a healing tool was assimilated into the religious practices of the time – early Hinduism. As Hinduism matured and Buddhism was founded in India, incense became an integral part of Buddhism as well. Around 200 CE, a group of wandering Buddhist monks introduced incense stick making to China.
Agarbatti are an integral part of any Hindu ritual. During rituals, an incense stick is lighted to remove unpleasant odors in the air. It creates the perfect setting for an auspicious ritual by filling the air with a pleasant smell. As they release smoke, they also act as organic disinfectants that drive away insects.
It has some psychological benefits. The aroma of the incense stick has healing power that has a soothing effect on the mind. The calming effect relaxes the mind and helps in performing rituals with better concentration. Prayer offered with a calm mind acts like a meditation process. Agarbatti made up of bamboo is not used because to burn bamboo is strictly prohibited in Hinduism. Incense has its own spiritual significance. The incense stick burns itself completely into ashes and yet fills the air with a pleasant smell. This ritual basically denotes human virtue of sacrificing oneself for society. The sticks are used as air fresheners during normal days as well and integral part of every Hindu ceremonies.
The basic ingredients of an incense stick are bamboo sticks, paste  (generally made of charcoal powder or wood powder and joss/jiggit/gum/tabu powder – an adhesive made from the bark of litsea glutinosa and other trees), and the perfume ingredients – which traditionally would be a powder of mixed ground ingredients, though more commonly is a solvent of perfumes and/or essential oils. After the base paste has been applied to the bamboo stick, it is either, in the traditional method, while still moist, immediately rolled into the flavourant, or, more commonly, left in the sun for several days to dry, and then dipped into the scented solvent.
Many Indian incense makers follow Ayurvedic principles, in which the ingredients that go into incense-making are categorized into five classes: ether (fruits), for example star anise; water (stems and branches), for example sandalwood, aloeswood, cedar wood, cassia, frankincense, myrrh, and borneol; earth (roots), for example turmeric, vetiver, ginger, costus root, valerian, Indian spikenard; fire (flowers), for example clove; and air (leaves), for example patchouli.
Halmaddi is a fragrant binding ingredient which is used in traditional masala incense. It is an earth coloured liquid resin drawn from the Ailanthus triphysa tree; as with other resins, it is a viscous semi-liquid when fresh, it hardens to a brittle solid as it evaporates and ages. Some incense makers mix it with honey in order to keep it pliable. Due to crude extraction methods which resulted in trees dying, by the 1990s the Forest Department in India had banned resin extraction; this forced up the price of halmaddi, so its usage in incense making declined. In 2011, extraction was allowed under leasing agreements, which increased in 2013, though production is still sufficiently limited for the resin to sometimes be stolen via improper extraction to be sold on the black market. Other tree resins or gums are also used as a binding agent, such as amber, myrrh, and frankincense, and these will add their distinctive fragrance to the finished incense; some resins, such as gum arabic, may be used where it is desirable for the binding agent to have no fragrance of its own.
Production may be partly or completely by hand, or partly or completely by machine. There are semi-automatic machine for applying paste, semi-automatic machine for perfume-dipping, semi-automatic machine for packing, or fully automated machines which apply paste and scent, though the bulk of production is done by hand-rolling at home. There are about 5,000 incense companies in India which take raw un-perfumed sticks hand-rolled by approximately 200,000 women working part-time at home, apply their own brand of perfume, and package the sticks for sale. An experienced home-worker can produce 4,000 raw sticks a day. There are about 25 main companies, who together account for up to 30% of the market, and around 500 of the companies, including a significant number of the main companies, are based in Bangalore. The state of Karnataka, referred to as the Capital of Agarbathi (Incense Sticks), is the leading producer of the agarbathi in India, with Mysore and Bangalore being the main manufacturing centres. The Mysore region is recognised as a pioneer in the activity of agarbathi manufacturing and this is one of the main cluster activities that exist in the city. In recent years, growth in the production of agarbathi (incense sticks), Dhoop-Deep has been seen in every part of India. There are plenty of manufacturers in Maharashtra and Gujrat and the western India agarbatti market is totally dominated by them. At a national level, the most prominent manufacturers include N. Ranga Rao & Sons with their Cycle Pure Agarbathies and ITC with their Mangaldheep.
Dhoops are an extruded incense, lacking a core bamboo stick. Many dhoops have very concentrated scents and emits a lot of smoke when burned. The most well-known dhoop is probably Chandan Dhoop. It contains a high percentage of sandalwood.
For most Indians, incense remains an important part of the daily puja ritual, which is a religious offering performed by all Hindus to their deities, especially during the beginning of a new venture, or to commemorate some special occasion. The aspect of the ritual known as dhupa involves the offering of incense before the picture of a deity, as a token of respect. The smoke is believed to ward off demons and cleanse the air around. They are fragmented.
A sādhu will regularly burn incense in this fashion, as a gesture to Agni, the God of Fire. For the sadhu, the world is alive with unseen forces that must be continually propitiated with offerings and cleansing rituals. Their sacred fireplaces, known as dhuni, perform the same function as incense, on a larger scale, which is to transform matter into aether. Burning incense is thus a reminder, of the sacred power of fire to transform, and the ultimate journey of all physical matter towards spirit.