International BusinessClock makers exit due to high taxes
Faced with a heavy tax burden, the small-scale wall clock makers of Morbi (Gujarat) are diversifying into ceramics, stationery items and retail. Besides, the industry is also losing ground to the metros and cities like Bangalore, where clock manufacturing has started picking up and taxation levels are lower, Morbi players claim.
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Morbi is regarded as the largest wall clock manufacturing hub in India, with as many as 200 small-scale units. It also houses two of Asia’s largest wall clock manufacturers — Ajanta and Samay.
Having survived the slowdown and fierce competition from Chinese players, the industry is reeling under the burden of value added tax (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.
“Times are bad, with the tax burden hurting us. People are leaving the wall clock business and entering ceramics, retailing and stationery. Moreover, the industry is also growing in cities like Delhi, Calcutta, Bangalore and Chennai. Delhi is giving us tough competition, as they pay lower tax,” said Shashang Dangi, president of the Morbi Clock and Parts Manufacturing Association.
The annual turnover of the small units is Rs 100-125 crore, and the industry gives direct and indirect employment to about 10,000 people. More than 60 per cent of the workers in the clock factories are women.
Two years ago, there were more than 300 units in Morbi. Today, only about 200 are active.