THOOTHUKUDI: The steep hike in the tax rate under the Goods and Servic Tax (GST) regime for semi-mechanised safety match units, which caters about 75 per cent of the national safety matches market, would only help the Pakistani manufacturers, according to the National Small Match Manufacturers Association (NSMMA).
Tamil Nadu has around 300 semi-mechanised match units in the districts of Thoothukudi, Tirunelveli, Virudhunagar, Vellore and Dharmapuri along with around 1,200 job work units that do the manual works of filling and packaging, says NSMMA.
This is for the simple reason of steep increase in tax slab to 18 per cent for the safety matches manufactured by semi-mechanised units from the pre-GST tax rate of six per cent resulting in a hike in the selling price of safety matches produced in Tamil Nadu to around 10 per cent, says the association.
“We have no other go but to increase the cost of one bundle consisting of 600 match boxes to a minimum of Rs 330 against our price of Rs 300 before the implementation of GST,” said Sethuratinam, secretary of NSMMA, one of the biggest associations of match manufacturers in the country.
The semi-mechanised match manufacturing units having around four lakh direct and indirect employees in the state, have re-commenced their operation on July 10 after the ten-day lockout demanding the roll back of the 18 per cent GST rate, but have already lost many of their clients in the north India. “Usually we start our supply from the month of June to cater to the Deepavali market, but now our buyers in North India hesitate to place order, expecting the government to reduce the tax rate,” said Sethuratinam, adding, “some of our clients too were learned to have shifted towards the Pakistani matches that now cost less when compared to the Indian made safety matches by small manufacturers.”
This is in addition semi-mechanised units facing competition from fully mechanised units. The fully mechanised units that were earlier levied 19 per cent tax including central excise and VAT, are now under 18 per cent GST. “Thus having an advantage under GST, the fully mechanised bigger manufacturers could slash their selling price against the safety matches produced by smaller manufacturers,” said Sethuratinam. He was, however, hopeful that the government would consider their demand of reducing the tax rate so as to encourage smaller safety match units that represent the “Make In India” programme of the Sri Narendra Modi-led Union government.
