due to this, need your help whether we can use perl (using hash) for merging files or using sql database (pl sql) to make it faster.
It should be quite possible to do it perl. Keep the config file and the relevant parts of the smaller file (file2) in memory, and process the larger file (file1) line by line.
Of course you can do it in SQL too. If the records already exists in a database, that's probably a simpler approach. If not, importing it likely takes as long as doing the whole processing in Perl.