High GST on crackers hits corrugated box makers too

COIMBATORE: The high tax rate of 28 per cent on firecrackers has affected their sales this year, which has in turn hit the corrugated box manufacturing industry in Sivakasi. Despite being the festival season, job orders have fallen steeply.

This is worrying the industrialists, said K Rama Moorthy, Sivakasi branch president of the South India Corrugated Box Manufacturers Association. Only solution is to reduce the GST rate on firecrackers, he added.

“Corrugated boxes, used to pack crackers, fall in the 12 percent GST slab. But as crackers are in the 28 per cent slab, the demand has fallen. This year, the cracker retail business has been affected so much that our industry is also suffering from its impact. In Sivakasi, job orders are down by 40 per cent now. It has affected nearly 150 corrugated box manufacturers in the area, who employ over 5,000 people,” he said.

Though corrugated-box units in other districts were also not doing well, those in Sivakasi were hoping to survive with orders during the Diwali sesaon. But the GST rate of 28 per cent on firecrackers has hit them also hard, he added.

He also pointed out that crackers used to be sold with advance payment earlier. Now, these are done for credit as manufacturers are facing severe financial crisis. Consumers were expecting prices to come down after the implementation of GST. Instead, prices have risen after GST. The government should consider reducing the tax rate.

“We welcome GST. But the abnormal tax rates on various products should hav e been avoided. Reducing GST rate on firecrackers is the only solution to this problem,” said  Moorthy. Corrugated boxes play a major role in packaging, he pointed out. There are around 3,000 corrugated-box units in Tamil Nadu. They employ around one lakh people.

Already, the poor quality of craft paper, the raw material for the boxes, and the steep increase in its price have affected the industry. After GST was implemented, the situation has worsened, he added.

‘Only solution’

K Rama Moorthy, Sivakasi branch president of the South India Corrugated
Box Manufacturers Association said that the abnormal tax rates on various products should have been avoided. Reducing the GST rate on firecrackers is the only solution to this problem,
he added.