The economic factor has left an impact on the fireworks industry which is already facing the challenge of illegal import of low-cost firecrackers from China
Diwali is only a couple of weeks away, but firework sales are down by 30 per cent this festive season. The manufacturers in Tamil Nadu's Sivakasi, the fireworks hub of India, attributed the fall in the production and sales to the negative impact of demonetisation and the introduction of Goods and Services Tax (GST).
The economic factor has left an impact on the fireworks industry which is already facing the challenge of illegal import of low-cost firecrackers from China.
Prime Minister Narendra Modi's demonetisation announcement on November 8 last year, days after Diwali festival, had brought the industry to a complete standstill as the dealers delayed the payment by several months, said major fireworks manufacturer in Sivakasi.
Sivakasi in Virudhunagar district in Southern Tamil Nadu is home to over 800 fireworks industries whose market is pegged at Rs 4,000 crore per annum.
As the industry started recovering from the impact of demonetisation, 28 per cent GST on firecrackers delivered a deadly blow to the industry. "Prior to GST, we were paying only 2 per cent central sales tax while the consumers would pay 12.5 per cent central excise tax at the time of purchase. Now the manufacturers have to pay 28 per cent GST which is huge," said Tamil Nadu Fireworks and Amorces Manufacturers Association treasurer K Mariappan.
Mariappan said that only 50 per cent of the usual production has been achieved this year. "We don't know how much of this will reach the consumers. Especially since prices have gone up by 40 per cent for consumers," he said.
N Raja, founder president of TN Cracker Works and Workers Protection Movement, said, with GST increasing the manufacturing cost, and illegal Chinese crackers being available at one-tenth price, "Fireworks industries survival depends on the retail sale during Diwali. So far the sale of crackers is down by 30 per cent compared to last year."
SIVAKASI WOES
- Sivakasi in Tamil Nadu is home to over 800 fireworks industries with an annual market pegged at Rs 4,000 crore.
- The manufacturers say only 50 per cent production was achieved this year as the prices have gone up by 40 per cent for consumers.
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