From Sivakasi to Diwali markets: Inside India’s firecracker economy | Industry News

An October 2026 report by The New Indian Express, citing a Tamil Nadu Industrial Development Corporation (TIDCO) tender document, put Sivakasi’s annual fireworks turnover at approximately ₹7,000 crore. The cluster has more than 1,070 licensed manufacturing units, employs around 300,000 people directly and supports nearly 500,000 families.

How big is Sivakasi’s contribution to the firecracker industry?

Located in Tamil Nadu’s Virudhunagar district, Sivakasi was dubbed ‘Kutty Japan’, or ‘Mini Japan’, by former prime minister Jawaharlal Nehru for its high industrial efficiency. The town accounts for around 85 per cent of India’s organised fireworks trade. Its manufacturing ecosystem has developed over several decades, supported by chemical suppliers, printing presses, packaging companies and transport operators. The region’s dry climate has also helped it emerge as a major production centre.

The concentration of manufacturing in Sivakasi also means that the town’s production and employment trends have a significant bearing on the wider industry. However, its reported share of the organised trade does not necessarily capture the entire national market, including unorganised activity.

The business is heavily dependent on seasonal demand, particularly during Diwali. According to an earlier Business Standard report, nearly 80 per cent of Sivakasi’s sales, amounting to more than ₹4,000 crore, come from the Diwali market. Vishu celebrations in Kerala account for another 10 per cent, while festivals such as Ganesh Chaturthi contribute the remaining 10 per cent.

This dependence on a few festival seasons makes manufacturers vulnerable to disruptions in the months leading up to Diwali. It also concentrates much of the industry’s annual revenue within a limited sales window, making production delays, unsold inventory and restrictions during the festive period particularly consequential for businesses.

How is the industry changing?

The shift towards green crackers has emerged as a major change for fireworks manufacturers.

In October 2018, the Ministry of Science and Technology announced that the Council of Scientific and Industrial Research (CSIR) had developed three less-polluting formulations — SWAS (Safe Water Releaser), SAFAL (Safe Minimal Aluminium) and STAR (Safe Thermite Cracker).

According to CSIR’s National Environmental Engineering Research Institute (NEERI), these formulations are designed to reduce emissions compared with conventional fireworks. SWAS, for instance, was developed to lower particulate emissions by around 30-35 per cent.

However, the transition has brought additional requirements for manufacturers, including product testing, certification and regulatory compliance. CSIR-NEERI says green-cracker registration is product-specific and is available only to manufacturers holding the required explosives manufacturing licence.

These requirements add another dimension to the industry’s cost structure, although available information does not establish how much manufacturers spend on compliance or how significantly it affects their margins.

The industry is also regulated by the Petroleum and Explosives Safety Organisation (PESO), which oversees the manufacture, storage and transportation of explosives under the Explosives Rules, 2008.

Weather-related disruptions add to these challenges. According to The New Indian Express, rainfall in October 2026 forced several factories in Sivakasi to suspend production for nearly a week. Small Cracker Manufacturers Association president G Vinayaga Moorthi said the disruption had affected around 20 per cent of production.

Such disruptions underline the risks faced by an industry whose production schedules are closely linked to festival-driven demand.

Is India’s firecracker business growing?

In October 2018, then Union Science and Technology Minister Harsh Vardhan said the Indian fireworks industry had an annual turnover of more than ₹6,000 crore and provided employment to over 500,000 families, directly and indirectly.

By 2021, however, industry representatives were reporting a sharp decline in business. India Today quoted T Kannan, then general secretary of the Indian Fireworks Manufacturers’ Association (TIFMA), as saying that the industry’s turnover had fallen to around ₹3,000 crore following factory closures, pandemic-related disruptions and uncertainty over restrictions on firecrackers.

These estimates suggest that the sector has faced significant business disruptions over the years. However, the absence of a consistent and comparable measure makes it difficult to establish its growth trajectory.

The figures also refer to different periods and sources, with the latest ₹7,000 crore estimate specifically covering Sivakasi. As a result, they cannot be used to calculate a reliable national growth rate. Moreover, the estimates are expressed in nominal terms and do not account for inflation.

What do tax collections indicate?

Tax data offer another way to examine the industry, although the available figures do not establish its overall contribution to government revenue.

The Central Board of Indirect Taxes and Customs (CBIC) classifies fireworks under HSN code 3604, for which the cited GST rate is 18 per cent. Records of the GST Council show that the rate was reduced from 28 per cent to 18 per cent in 2017.