Morbi clock industry counts its days

Recent hike in VAT may spell more trouble.

Time seems to be running out for the Morbi-based clock manufacturing industry. Even as most of the industries across the country are braving the onslaught from China, this industry has taken a hit.

In a span of five years, Chinese clock-makers seem to have almost captured the market in the region. So much so that the wall clock production has plunged from 150,000 pieces per day to a paltry 30,000 a day. And the number of manufacturing units has come down to a mere 45.

Further, the hike in the value added tax (VAT) has resulted in the closure of at least 15 units in recent past. The Gujarat government has hiked VAT from 4 per cent to 5 per cent and 12.5 per cent to 15 per cent, respectively.

"Wall clock manufacturers in Morbi had to bear a tax burden of eight per cent. But after the implementation of VAT, this rose to 12.5 per cent. In the 2008-09 state Budget, the VAT was again increased by 2.5 per cent, taking it to 15 per cent as against a VAT of four per cent in other states. Consumers now prefer buying clocks from other states at reduced rates instead of paying up a VAT of 15 per cent on our products. Moreover, they don't have to spend much on transportation either," said Sashang Dangi, president of Morbi Wall Clock Manufacturing Association.

According to Dangi, numerous wall clock and alarm clock manufacturing units have now come up in Delhi, Kolkata, Mumbai. Besides, competition from China has increased and it accounts for sales of over 60,000 clocks per day.

Compared to an alarm clock worth Rs 20 manufactured in Morbi, its Chinese counterpart is available for just Rs 13. In recent times, the competition has forced manufacturers to diversify into other businesses like home appliances or electronic goods.

"If the tax burden keeps on increasing, it won't take much time for the clock manufacturing industry in Morbi to come to a standstill," said industry sources.