18th June 2014

Courtesy: The Hindu BusinessLine

TN safety match industry seeks excise duty exemption

Safety match industry in Tamil Nadu is seeking excise duty exemption to bring down costs and compete with the unorganised sector.

Also, lifestyle changes including falling smoking habits, increased use of lighters and stove igniters have hit demand growth. Usage of safety matches should have increased by 7.5 per cent annually but has been stagnant for over a decade, according to J. Devadoss, Secretary, South India Match Manufacturers Association.

Annually, the safety match industry produces nearly 60 lakh bundles with each bundle having 24,000 match sticks, he told Business Line. Ten years ago, there were nearly 10,000 safety match factories in southern India employing nearly 7.50 lakh people. This has now dropped to nearly 1,000 units employing 50,000. Some of the biggest production centres include Kovilpatti, Sivakasi, Virudhunagar, Ettayyapuram and Sattur, he said.

The industry has urged the government to scrap excise duty for safety matches. This will reduce the disparity in the cost of production of matches between the organised and unorganised sectors.The government should safeguard the industry which sells a box of 50 match sticks for ₹ One , he said.

Devadoss said the organised match manufacturers are not in a level playing field to face competition from the unorganised sector due to this anomaly in Excise duty payment of 8 to 12 per cent depending up on the category of the unit.

In 2006, the Excise department allowed sale of chemical dipped splints to anybody on payment of ad valorem duty by the machine made match industry. Traders purchasing chemical dipped splints from machine made units started manufacturing their own brand without licences like Central Excise ESI, Arms Act and Factory Act.

According to Central Excise, the industry’s annual turnover is around ₹2,100 crore. The government should get Excise revenue of around ₹100 crore, but the government record shows that the collection for the last financial year was only ₹46.06 crore. This means for over 50 per cent of the matches marketed in India by the unorganised sector, Excise duty has not been paid. This in turn affects those units paying the duty and follow all government norms, he said.