Cracker Market and Business During Diwali in India: Facts and Figures

Diwali, the festival of lights, is synonymous with the lighting of diyas, elaborate decorations, and the bursting of firecrackers. Over the years, the fireworks industry has become an integral part of Diwali celebrations across India. However, with increasing environmental concerns and shifting societal attitudes, the dynamics of the cracker market have evolved. Let’s explore the scale of this market, its economic impact, and recent trends based on available data and reports.

1. Size of the Firecracker Industry

India's firecracker industry, largely based in Sivakasi, Tamil Nadu, is one of the oldest in the world. Sivakasi accounts for about 90% of India's fireworks production. According to industry estimates, the firecracker market in India was valued at approximately ₹5,000-6,000 crore annually, with a major chunk of sales happening during Diwali.

Sivakasi's dominance: Sivakasi alone houses around 1,000+ units producing a variety of crackers, employing over 8 lakh people, directly and indirectly.
Seasonality: Almost 70-80% of the annual sales for firecrackers happen during the Diwali season, making it a highly seasonal business.

2. Employment and Livelihood Impact

The firecracker industry is a significant source of livelihood for many workers, especially in Tamil Nadu, where a large number of families are dependent on this seasonal trade.

Employment statistics: The industry employs over 8 lakh workers, both directly in production units and indirectly in supply chains.
Gender-inclusive employment: A large portion of the workforce consists of women, who are employed in different stages of firecracker production, such as packing, assembling, and quality checks.

3. Economic Impact

Despite the growing criticism of firecrackers due to their environmental impact, the economic contribution of this industry is substantial:

GST revenue: The sale of firecrackers is subject to 28% GST, which contributes significantly to the state's revenue. In peak seasons, the government collects crores of rupees in tax from this industry.
Contribution to local economy: Regions like Sivakasi depend heavily on this industry, and any reduction in firecracker sales has a direct impact on the local economy.

4. Changing Market Dynamics

Over the past few years, there has been a noticeable shift in consumer behavior due to rising environmental awareness and government regulations aimed at controlling pollution.

Environmental Concerns: Firecrackers contribute significantly to air and noise pollution, leading to many states imposing strict regulations on their sale and use, especially in metropolitan cities.
Green Crackers: In response to these concerns, there has been a rise in the demand for “green crackers”, which produce less pollution. Green crackers are estimated to account for about 30% of total Diwali sales in major cities.
Court Rulings: The Supreme Court of India has been actively involved in regulating the use of firecrackers, with measures like restricted hours for bursting crackers and the banning of particularly hazardous types of fireworks.

5. Sales Trends

Sales of firecrackers during Diwali have seen some fluctuations, but the market still holds a significant presence.

2023 Diwali Sales: The 2023 Diwali season witnessed an estimated sale of around ₹3,000-4,000 crore, slightly lower than pre-pandemic levels but showcasing recovery compared to the pandemic-affected years.
Effect of Bans: In states like Delhi and West Bengal, where cracker bans are strictly enforced, sales have plummeted by almost 50% in recent years. However, in states with lenient regulations, firecracker sales continue to be robust.

6. Future of the Firecracker Industry

As India moves towards stricter pollution norms and sustainable practices, the firecracker industry faces a challenging future. However, innovation in the form of green crackers and adherence to environmental guidelines could provide a lifeline to this traditional industry.

Innovation in the sector: With initiatives from organizations like the CSIR-NEERI (Council of Scientific and Industrial Research - National Environmental Engineering Research Institute), the focus is shifting towards producing firecrackers that emit 30-35% less pollutants, which may sustain the industry's growth while reducing environmental damage.
Declining consumer interest: Surveys indicate that younger generations are increasingly opting out of firecracker-related festivities, signaling a potential shift in market dynamics over the next decade.

7. Government Initiatives and Regulations

To regulate the environmental impact, both state and central governments have introduced various measures:

Regulations on manufacturing: Firecracker manufacturing is subject to stringent labor and safety regulations due to the hazardous nature of production. The government has also put in place laws regarding the use of child labor in this industry.
Pollution control measures: During Diwali, several state governments impose partial or complete bans on the sale and bursting of crackers in an attempt to control pollution levels, especially in metropolitan areas like Delhi-NCR.

Conclusion

While the firecracker market in India during Diwali remains substantial, contributing significantly to the economy and providing employment to thousands, it is also at a crossroads. The environmental impact of firecrackers has led to growing regulations, bans, and a shift in consumer preferences. The rise of eco-friendly alternatives such as green crackers and evolving market trends will play a crucial role in shaping the future of the firecracker industry in India.

As the country balances tradition with environmental responsibility, the firecracker industry must adapt to continue thriving in the festive spirit of Diwali.