GST woes, rainfall ‘burn’ Kovilpatti match industry prospects

Safety match manufacturers in Kovilpatti, who were confident of a favourable action towards their demand for reduction in the existing Goods and Services Tax (GST) rate of 18 per cent imposed on the product being taken at the 38th GST council meeting, however, turned disappointed. With the recently concluded meeting chaired by Union Finance Minister Nirmala Sitharaman not taking any considerable action on the demand, the long wait for lowering the GST rate for survival of the industry, continues, J Devadoss, secretary, South India Match Manufacturers’ Association, Kovilpatti, said on Sunday.

According to M Paramasivam, president, National Small Match Manufacturers’ Association (NSMMA), Kovilpatti, the match production this year was affected by around 30 per cent following rains. As Kovilpatti and its suburbs experienced copious rainfall, it proved key to agriculture, and many workers- who relied on this manufacturing industry-switched to farm labour. As the workforce was offered higher remuneration by farmers relying on rain-fed cultivation, the safety match manufacturers could hardly retain its workforce intact. Hence, the shrinking workforce resulted in production fall. Mechanised units also suffered breakdown as match sticks turned moist from the recent rains. This also caused a drop in production, he said.

While Kovilpatti was once a strong home market with guaranteed buoyant domestic demand, the case is not so now. Over the last three years, almost 70 percent of ancillary units relied on manual job works such as filling boxes with matchsticks and packaging. Now, the mere survival of the industry relies on export trade, Paramasivam said.

P Kondalraj, managing director, Kovilpatti Match Consortium Private Limited, said that nearly 60 percent of the safety match production was affected in the rural areas, while it was only about 10 percent in urban areas. That too, the case with urban areas was so only over the last one week when match manufacturing workers were roped in by political parties to canvass for votes ahead of the rural local body polls, he said.

R Gopalsamy, vice president, NSMMA, however, said there’s a significant growth in export trade of this consumer product. With a sharp rise of 50 percent in export volume, many manufacturers hope to rebound in this market. Besides, imports of matchsticks from neighbouring Pakistan, the major producer, were not that receptive owing to its alleged inferior quality, he added. Besides, cost of the commodity also turned dearer in Indonesia, one of the other major producers. As these market conditions turned negative in these countries, export traders in India capitalised on the market condition, giving the sector a boom. “Almost 90 percent of production in India caters to consumer market in a total of 32 African countries. But domestic trade is on a declining trend by the year,” the manufacturer-cum-exporter, however, said. Further, exporters had been facing delays in availing input tax credit while making shipments through merchandise traders. The government authorities should intervene and address the plight to facilitate exporters, Gopalsamy added.