India has a huge fireworks industry, then why does it exports so little? | Industry News

India’s recorded exports remain below $1 million annually, according to official data. More than 99 per cent of India’s fireworks production is consumed domestically, leaving only a tiny fraction for overseas markets.

What explains this gap, and why has an industry with such a large domestic footprint struggled to compete internationally?

India’s fireworks export paradox

Centred primarily in the town of Sivakasi in Tamil Nadu, which accounts for roughly 85-90 per cent of the country’s total production, India’s fireworks industry has a domestic market valued at around ₹7,000 crore, according to the Tamil Nadu Fireworks and Amorces Manufacturers Association (TANFAMA). Of this, the core factory-level manufacturing segment accounts for roughly ₹2,000 crore, while the remaining ₹5,000 crore comes from intermediate distribution channels, including wholesale, transportation and retail mark-ups.

More than 80 per cent of domestic revenue, or over ₹4,000 crore, is generated during the 30-day period surrounding Diwali. The remaining demand comes from regional celebrations such as Vishu in Kerala and Ganesh Chaturthi in Maharashtra.

However, this strong domestic demand has not translated into a significant export presence. According to the UN Comtrade Database and the World Bank’s World Integrated Trade Solution (WITS), India’s recorded fireworks exports stand at $757,000, giving the country just 0.042 per cent of the global export market. The leading destinations include Vietnam, Bulgaria and the United States.

China dominates the global fireworks trade

India’s limited presence in international markets becomes more apparent when compared with China, which accounts for the overwhelming share of global fireworks shipments. According to UN Comtrade data, China’s annual fireworks exports range between $1.1 billion and $1.23 billion, with annual shipments of around 360,000-408,000 tonnes.

At the centre of this dominance is Liuyang city in China’s Hunan province, recognised as the “fireworks capital of the world”. The industrial cluster accounts for roughly 60 per cent of China’s domestic supply and around 70 per cent of its global exports.

According to bilateral trade data from the United Nations Comtrade Database and the Observatory of Economic Complexity (OEC), China’s primary export destinations for pyrotechnics include the United States, Germany, the Netherlands, Poland, the United Kingdom and Malaysia.

Several factors underpin China’s competitiveness, including specialised industrial clusters, low-cost labour, easy access to raw materials, a wide product range and government support. Generations of pyrotechnic skills and manufacturing knowledge have also helped the industry maintain competitive pricing.

Dr Biswajit Nag, professor of economics and trade policy at the Indian Institute of Foreign Trade (IIFT), said China also benefits from extensive global distribution networks and established relationships with international buyers, making it harder for Indian manufacturers to compete.

Other players in the global fireworks market include Germany, the Czech Republic and Poland.

Regulatory and logistical hurdles weigh on Indian exports

India’s export constraints stem from a combination of logistical bottlenecks, the classification of fireworks as dangerous cargo and stringent chemical regulations. Differences between Centre and state-level norms, along with restrictions at ports, further complicate the process.

Professor Nag said strong domestic demand and established distribution networks leave manufacturers with little incentive to explore overseas markets, particularly when local orders already absorb production capacity. Exporting becomes attractive only when the expected returns exceed those from domestic sales.

Regulatory classifications are another obstacle. Fireworks are classified as “low-hazard explosives” under the Explosives Rules, 2008, and fall under the “red” category in Tamil Nadu. The industry’s demand for classification as “low-risk pyrotechnic devices” and inclusion in the “white” category has remained pending for years, making foreign port clearances difficult. High transportation, insurance and hazardous-cargo handling costs add to the burden.

These challenges are particularly difficult for smaller exporters, who must also meet stringent international safety and certification requirements.

Dr Ajay Sahai, director general and CEO of the Federation of Indian Export Organisations (FIEO), said: “Fireworks require specialised dangerous-goods handling, suitable packaging and assured shipping capacity, which can be challenging for smaller consignments.”

“International certification is another area where focused support can unlock opportunities. Markets such as the European Union and the US have specific safety, testing, labelling and conformity requirements,” he added.

Chemical restrictions present another hurdle. The Supreme Court’s 2018 ban on barium nitrate to control domestic air pollution has affected manufacturers’ ability to produce formulations used in international markets. Barium nitrate forms the basis of nearly 80 per cent of global firecracker formulations.

Global markets, particularly Western countries, also use alternative chemical compounds such as potassium perchlorate. However, restrictions on their use in India make it difficult for domestic manufacturers to produce goods suited to overseas requirements.

Professor Nag also pointed to India’s fragmented production base, dominated by micro, small and medium enterprises (MSMEs), which limits economies of scale and cost competitiveness. Manufacturers primarily cater to domestic festivals and consumer preferences, which may not always align with overseas market requirements.

What will it take to make Indian firecrackers export-ready?

Despite these constraints, India has an opportunity to build a presence in the global fireworks market, provided manufacturers can improve product quality, meet international standards and ensure reliable deliveries.

Sahai said India could emerge as an additional sourcing destination by building buyer confidence through consistent quality, internationally compliant products and dependable delivery.

“A coordinated export development programme centred on Sivakasi would help accelerate this progress. Shared testing facilities, access to internationally recognised certification, product and packaging development, predictable approvals and reliable shipping arrangements should be its key elements. Equally important are investment in factory modernisation, worker safety and quality assurance. Aggregating orders and partnering with established overseas distributors can help smaller manufacturers participate, while a clear, legally compliant approval process can facilitate production suited to destination-market requirements,” said Sahai.

Professor Nag also pointed to the need for technology upgrades to improve productivity, international certification to meet global safety, quality and environmental standards, and government facilitation to simplify export procedures without compromising safety. He also called for fireworks to be reclassified as “low-risk pyrotechnic devices” and moved from the “red” to the “white” category to ease domestic and foreign port clearances.

Expanding exports would also create an opportunity for India to emerge as an alternative sourcing destination and compete with China, Professor Nag said.

However, the commercial viability of exports remains crucial. Sahai cautioned that overseas orders must generate adequate returns after accounting for freight and compliance costs. A practical starting point would be to build dedicated export capacity against confirmed orders and scale up as business relationships mature, he said.