The seizure was made by officers of Air Intelligence Unit, who intercepted two groups of Chinese nationals who had come to board a flight to China, officials said.
During checking, 725 kg of red sanders wood kept in the form of small logs was recovered from their baggages, they said.
The Chinese nationals were subsequently questioned by the custom authorities, during which they told they were carrying the stock for ornamental purposes, sources said.
The value of 725 kg of red sanders is estimated to be around Rs 36.50 lakh.
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Red sanders wood, also known as red sandalwood, is rich in medicinal value and comes under the endangered category of wild flora and fauna.
The wood, which also carries fragrance, has a huge demand in China due to its medicinal properties and cultural relevance, and there has been an increase in its smuggling in the past few years, officials said.
It had seized 203 metric tonnes of red sanders after registration of these cases from Chennai, Kolkata, Mumbai and Tuticorin.
The DRI had registered 20 cases in 2009-10, 27 in 2010-11 and a highest of 34 in 2011-12 and seized 337, 373 and 611 metric tonnes of red sanders wood.
The detections were made in Maharashtra, West Bengal, Tamil Nadu, Gujarat, Kerala, Assam, Delhi and Rajasthan among others.