Kerosene stove industry breathes easy

The finance minister's decision of excluding kerosene stoves from the burden of taxation, including VAT, has brought a ray of hope to the kerosene stove manufacturers in Rajkot.

"With VAT imposed on industry; it was almost an end of our business, as we have already reached a point of saturation in the domestic circuit with LPG and other options invading the buyers choice," said Ram Barchha of Ashok Stove and Mira Udyog.

There are atleast 12 business operators, manufacturing around 10,000 to 12,000 pieces on a daily basis for 26 days in a month.

The product is 100% tax free and there is no levy applicable, either by the state government or central government, he added. With an annual 37,44,000 stoves manufactured in Rajkot itself, the business turnover is approximately Rs 93.6 Lakh.

Under the umbrella of Bharatiya Stove Manufacturers Association, we had requested the FM to discard kerosene stoves from VAT.

In past, stove was considered as a luxurious item and therefore 12.5 per cent of VAT duty was levied on it but things have change now.

Secondly, it was very tough to convenience our business network due to the unorganised market network therefore, recovering VAT from them is almost impossible, said Ram.

Exports have by and large scaled since last four years, as the share in domestic market started shrinking with other private players also entering the LPG segment apart from government, so as an avenue to sustain in the business, exports to third-world was explored by most of the operators, said Ram Barchhha. The kerosene stove market operators in Rajkot feel that the market has reached its saturation point because along with struggling for survival in the domestic circuit, fighting foreign territory is also hard.

"Export share, mainly in the third-world countries, out of the total production from Rajkot would be somewhere around 25 per cent of the entire production, as kerosene wick-stove is not a preferred product in the developed nations," said Ketan Chotai, an operator of Saral Stove and Saurashtra Tin Works.

Chinese manufacturers have caused a dent in the business by and large, he added.

"The congestation in the industry has compelled us to diversify into other areas of kitchenware products as most of the operators in the business have been surviving because there is not taxation on such products," Ketan said.

Looking at the current scenario, the investment patterns is almost in parity with small scale industry.

However Ram said, "Nothing less than Rs 1 crore is need to start the business operation, initially, and ofcourse tough business competition, can not be overlooked."