Tax woes displace Morbi as wall clock manufacturing hub
December, 13th 2011
The town of Morbi, once known as Indias foremost wall clock production hub, is fast losing this distinction, with Delhi, Kolkata, Chennai and Hyderabad providing some tough competition.
According to some clockmakers, the industry can only survive if the government gives it relief in the form of revised VAT prices. awn Morbi is now no more a favourite among wall clock buyers, due to hurdles such as heavy taxes and high transportation costs. In the last five years, the wall clock industry in Morbi has been experiencing negative growth. The main issue that we are facing is the high value added tax (VAT) and increasing transportation costs, said Shashang Dangi, the president of the Morbi Clock and Parts Manufacturing Association.
Having survived the slowdown and fierce competition from Chinese players, the industry is reeling under the burden of VAT. According to manufacturers here, the industry has to pay 15 per cent tax, of which 12.5 per cent is VAT and 2.5 per cent is additional tax.
During the past two years more than 20 per cent of the clock industrys workers have left to join the ceramics and other industries. Some of them also have migrated to other cities like Rajkot and Ahmedabad for work. Several times we have asked the state government to reduce VAT to four per cent, but there is no response from them yet, said Dangi.
The output of even the largest wall clock manufacturer, Ajanta, has declined by 75 per cent over the past decade to 25,000 clocks per day, from more than one lakh clocks a day 10 years back.
The market share of Morbi in the wall clock industry has declined in the past few years, but we are still leading in India. Overall demand has come down drastically in the past few years, as wall clocks are common everywhere and each has a shelf life of nearly 20 years, said Jaysukh Patel, managing director of the Ajanta group.
Due to high fuel prices during the past two years, transportation costs have increased, thereby increasing Morbis wall clock manufacturers production costs by almost 40 per cent. Dangi added that the wall clock industry has also developed in other Indian cities such as Delhi, Chennai, Hyderabad, and Kolkata, which has reduced Morbis business by almost 25-30 per cent.
Five years ago, Morbi had 300 clock units; today only 100-125 are active.