Even as the Indian firecrackers industry is staring at potentially cataclysmic losses after the Supreme Court of the country upheld the ban on firecrackers earlier this week, the Chinese firecrackers industry is all set to endure starker losses ahead of Diwali and other festivals.
The Confederation of All India Traders (CAIT) has informed that Chinese exporters may suffer losses to the tune of Rs 50,000 crores on account of Indians boycotting the ‘Made in China’ products. A survey conducted by the trade body’s research arm in 20 distribution cities across the country showed that thus Indian traders or importers have placed no orders for Diwali goods, firecrackers, or other items with their Chinese exporters.
“Like previous year, this year too CAIT has given a call of ‘boycott Chinese goods’ and it is certain that China is going to suffer a business loss of about ₹50,000 crores in terms of stoppage of import of Chinese goods by Indian traders,” CAIT stated in the statement on Friday.
CAIT secretary general Praveen Khandelwal spoke about the changes the trade body has seen among the Indian customers. He says Indians across major cities in the country do not seem interested in buying Chinese products. This is evident from the losses Chinese exporters suffered during the Rakhi festival.
Normally, Indian traders import goods worth Rs 70,000 crores from China during the festive season starting from Rakshabandhan to New Year Eve. However, this year, Chinese exporters have endured losses of close to Rs 5,000 crores during the Rakhi festival itself. Then, during the Ganesh Chaturthi, they suffered additional losses to the tune of Rs 500 crores.
The boycott of Chinese products, which took place in greater earnest following the Galwan Valley clashes between the PLA forces and the Indian Army last year, meant that the Indian homegrown industries that usually suffer at the hands of the Chinese exporters are set to gain more profits as consumers turn to them to fulfil their demand.
CAIT says domestic sales are expected to witness a major upsurge during the Diwali season owing to the increase in the number of consumers in the market across the country. The trade body forecasts Rs 2 lakh crores of inflow in the Indian economy through consumer spending during Diwali sales.
Even as CAIT has an optimistic outlook towards the overall growth of the Indian economy during the Diwali season, the domestic firecrackers industry may not be a potent contributor to this expected growth. The negative sentiments against Chinese products might have proved a boon for the struggling domestic firecrackers manufacturers. But the ban on firecrackers by several states, along with the Supreme Court’s imprimatur, has cast a pall over the possibility of increased sales in absence of Chinese goods.
The firecracker manufacturers are staring an abyss of uncertainty as states, including Odisha, Rajasthan, Delhi, Haryana, have ordered partial or complete ban on bursting firecrackers during the Diwali season.
SC defends banning of firecrackers, says only crackers with Barium salts are banned
The Supreme Court on Friday upheld the ban on firecrackers with a caveat that only those with Barium salts are prohibited. A bench of Justices M R Shah and A S Bopanna said however that no authority can be permitted the violation of the directions issued by it and allow banned firecrackers under the guise of celebration.
“Under the guise of enjoyment, you [manufacturers] cannot play with the lives of citizens. We are not against a particular community. We want to send a strong message that we are here for the protection of fundamental rights of citizens,” the Bench said.
Indian firecrackers industry staring at potential losses amidst ban imposed by various states
The judgment has the potential of adversely affecting the firecracker industry in the country, especially the manufacturers based out of the Sivakasi town of Virudhunagar district in Tamil Nadu, which produce over 90 per cent of firecrackers in the country. It is estimated that manufacturers in Sivakasi may be bracing for losses of more than Rs 500 crore this year due to the ban on bursting firecrackers.
As per a report, the production of firecrackers had been 50 per cent as compared to the last year’s production. Firecrackers worth Rs 3,000 crores were manufactured in 2020 while this year, the value of manufactured firecrackers has been close to Rs 1,500 crores only. After the ban, the impact would be around Rs 500 crore losses. Even the pandemic has had negatively impacted the firecrackers industry. The fear of the third Covid-19 wave and cracker ban last year has left many traders hesitating to buy the products.
Sivakasi, the hub of firecracker manufacturers in India has close to 6.5 lakh families, directly or indirectly, dependent on this industry for their livelihood. Once a booming industry, the firecrackers manufacturers are girding for a gloomy Diwali with uncertainty looming large as several states have announced a ban on crackers.
The pandemic and the economic difficulties induced by it had caused many factories to shut down. The ban on crackers has further exacerbated the lives of people in Sivakasi where working in firecrackers factories is the primary source of employment, given that land is not sufficiently arable for agriculture to flourish.
“If the ban continues for the coming years, we wouldn’t have any definite policy to manufacture. We were not prepared for the ban from these states. Firecrackers create pollution in the mind of people and not much in reality,” T Kannan was quoted as saying by the Financial Express. Kannan is the Director at Sree Balaji Fireworks told Financial Express Online, and is also the General Secretary of The Indian Fireworks Manufacturers Association.
