The firework trade’s shipping problems leads Indian manufacturers to tie-up with Chinese countrparts

In a interesting article in the Hindustan Times, the shipping problems on account of security concerns faced by Indian firework manufacturers is highlighed. Apprarently, both Singapore and Sri Lanka have recently denied access to ships with fireworks coming from India on-route to places like Durban. Other Indian ports like Nava Sheva in Mumbai have also had there own problems. As a result, firework manufacturers from India have tied-up with Chinese manufacturers and export products from China under the Indian maker’s label.

Sivakasi firecrackers made in China? Ganesan gets his firecrackers made in China, and then obfuscates where they are made. The individual cartons simply say “Sony Fireworks” — there’s no mention of Sivakasi, India or China — but the crate says “Made in China”.

A town of 4 lakh that makes Rs 800 crore worth of firecrackers every year, Sivakasi has had to adopt this ingenious practice after exports plummet by 320 per cent over a decade to no more than Rs 20 lakh today.

There are two, diverse reasons for this: Sivakasi’s fireworks need trans-shipment to reach the world, either through Chennai port or through Tuticorin, 100 km to its west — and then to Colombo or Singapore.

Singapore won’t allow ships laden with fireworks because of tightened safety laws. Sri Lanka, on the other hand, cites security reasons for stopping the transhipment of Sivakasi fireworks.  

“Colombo is terrified of anything to do with fireworks because of the LTTE threat,” said M. Selvaraj, a leading Sivakasi manufacturer.

Tying up with the Chinese, then, is the only way out. China is the world’s largest fireworks manufacturer, exporting nearly 95 per cent of its production, earning Rs 5,000 crore every year. There is no chance of Sivakasi matching that figure.

The town’s manufacturers tried to reach the world through other Indian ports but failed. Since 2003, the Centre has allowed export of fireworks through the Nava Sheva port in Mumbai, but exporters say the authorities are so wary that the ships often sail away.

“The authorities think militants could use firecrackers as a cover for moving explosives,” said Ganesan. “We have discussed our problems with the Chief Controller of Explosives in Nagpur, but he was not really helpful.”

Some need for trade facilitation measures here? And what exactly are the security concerns? Are fireworks exports covered by WTO rules?

Sometime ago, the International Economic Law and Policy blog had a post on trade in fireworks. See here. It also discussed shipping problems for the fireworks industry and quoted a press release from the US fireworks association. The press release:

International Shipping Problems Affect the US Fireworks Industry

2008 is proving to be a very difficult year for the Fireworks Industry in the United States.

Recent problems in China which include a shortage of shipping lines and ports, are now causing a severe shortage of fireworks.  This will affect both consumer fireworks stores and stands, as well as the annual July 4th Display in many cities and towns across America.  Most companies are reporting dramatic increases in both product and shipping costs.  Many companies are reporting a severe shortage  of inventory as fireworks that have been ordered and in many cases, paid for, are still sitting in China with little or no chance to arrive in time for the busy July 4th season.

Reports from China indicate that the current port accepting fireworks for shipment may close at any time as China prepares for the Olympic Games.

Fireworks Company owners are at a loss as they have no control over the severe price increases nor the lack of shipping coming from China.

There is no indication when or if this situation will get better.