The principal goal of the current study is to assess perchlorate contamination of groundwater and related health risks from the fireworks manufacturing area (Sivakasi) in South India. Seventy-four groundwater samples were gathered and analysed for electrical conductivity (EC), pH, total dissolved solids (TDS), sodium (Na+), magnesium (Mg2+), calcium (Ca2+), potassium (K+), sulphate (SO42−), bicarbonate (HCO3−), chloride (Cl−), fluoride (F−), nitrate (NO3−), and perchlorate (ClO4−). Perchlorate ranged from 0.00 to 0.21 mg/l with an average of 0.08 mg/l. About 61% of the samples (n = 45) contained higher perchlorate concentrations than the recommended level (0.07 mg/L) of World Health Organization (WHO). Similarly, 360.18 km2 of area exceeds the permissible limit of perchlorate as per WHO. Correlation analysis indicates that groundwater contamination is mainly caused due to anthropogenic activities. Vertical distribution results indicate that 52% of the samples fall in the ‘high-risk’ category, 39% of the samples fall under the ‘very high-risk’ category and 9% of the samples fall under ‘safe’ category in the shallow aquifer of depth up to 15 m from the ground level. Total Hazard Index (THI) results reveal that about 70%, 60%, and 40% of the samples are more vulnerable (THI > 1) for infants, children, and adults. This study suggests that higher health risks inferred for infants must be cared with a suitable management plan to recover the quality of the water to evade major health problems in the future.