In the wake of the Goods and Service Tax (GST) rollout, the market for safety matches has shrunk, say industry stakeholders.
The GST payers can hardly afford the increased tax burden, and the sale of matches has come down by 25%, J. Devadoss, secretary, South India Match Manufacturers Association, told The Hindu on Sunday.
Bundles of match boxes are piling up in many factories. And the 18% GST levy on production of safety matches by semi-mechanised and fully mechanised units has affected the prospects of the stakeholders relying on the traditional industry. The higher GST rate will cast a long shadow on the industry in the long run if the GST is not lowered.
To safeguard the industry and protect the livelihoods of manufacturers and the workforce, the GST should be lowered to 12%, he stressed.
Manufacturers fear that the price of their product will increase in the coming year. At present, a match box is being sold at ₹1. But the price can jump to ₹2 next year. Not only retail traders, but a total of around 130 crore consumers across India will be at the receiving end if the market price of match boxes goes up, he said.
On the other hand, lowering of the tax rate to 12% will see prompt remittance of the GST by all manufacturers. It will also lead to a six-fold increase in revenue, fetching ₹300 crore annually. Prior to the implementation of the GST, an average excise duty of ₹60 crore was realised annually, Mr. Devadoss pointed out.
With a meagre profit margin of 2%-3% from sale, the manufacturers have been availing themselves of input benefit of 9%. Hence, 12% GST will not be a burden on the manufacturers.
