Despite strong growth, India’s toy story has challenges to overcome – The New Indian Express

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Express press service

NEW DELHI: India’s toy manufacturing industry has experienced a new era since the Center banned the sale of uncertified toys and imposed heavy tariffs on imports.

Over the past three years (FY2019-FY2022), the import of toys in the local market has decreased by 70% while there has been a 61% increase in exports, according to government data.

Despite this significant turnaround, India needs to overcome a few more hurdles to claim global dominance in this industry, which is expected to grow from $141.08 billion in 2021 to $230.64 billion by 2028 at a CAGR of 7 ,30 %.

According to industry experts, small manufacturers are unable to switch to machine production because the taxes levied on the equipment are high. There has been an increase in the production of electronic and battery-powered toys in India, which used to be mainly imported.

However, most small toy manufacturers do not have the necessary equipment to produce electric toys and are reluctant to upgrade because the equipment is subject to a 34% import duty.

Even though the Bureau of Indian Standard (BIS) has granted over 800 licenses to toy producers, many of them have struggled to keep up with regulatory changes and adhere to BIS standards. This has been a problem for small retailers who are facing shortage of supply as they are unwilling to buy substandard product and therefore rely only on large companies to produce and supply quality products.

Uncertainty on import duties

The industry is also concerned that the government will make changes to the current tax system, which has given it a competitive advantage.

The fear comes as the Center has flip-flopped in other sectors and India’s efforts to reduce dependence on China have come largely because of a border dispute. which is getting worse.

In 2020, the Indian government increased customs duties from 20% to 60% combined with BIS certification requirements.

This has slowed the flow of low-quality imported toys, especially those from neighboring China, to the Indian market, to the benefit of local toy manufacturers.

“If they were to relax these regulations after a few months, the manufacturers would suffer a great loss. There has already been an investment of lakhs in machinery. If Chinese products were to be supplied to the Indian market again, our sales would decrease as their cheaper prices would remain attractive regardless of the harmful quality,” said Vipin Nijhawan, vice president of the Toy Association of India.

The sudden change in regulations has been a boon for Indian toymakers, but at the same time it has also led to supply shortages and price spikes. Smaller retailers have faced issues with product acquisition.

Soaring raw material prices

Sanjay, owner of Sanjay Toys in Delhi’s famous Jhandewalan market, said: “Plastic has also become expensive and the shorter supply with higher demand has prompted manufacturers to increase their margins, even raising the price of big. Polymer prices, according to industry estimates, in 2021 have jumped between 40% and 100% depending on the grades.

Addressing the issue of the price spike, Gulshan Gambhir, Director of Gulshan Industries, said, “There has been a price spike, but it is something that is due to macro/covid related factors which have led to a rise in raw material prices, but that’s something that’s been seen across all industries, so some costs have been absorbed and others passed on to the customer.”

According to a FICCI-KPMG report, India’s toy industry, which is currently valued at over $1 billion, has the potential to double by 2025. However, Indian toy makers, who want to dominate this market, are looking for additional support. of the Indian government.

Sourabh Kachru, Partner, Funride Toys LLP said: “We would like 4 things from the government including more toy clusters to increase production capacity and help create jobs. export of toys Toys to be added in all FDA agreements so that our global sales also increase Production Linked Incentive Program (PLI) should also be introduced in toys.

Kachru and other manufacturers seem convinced that the Indian toy industry not only has the ability to compete with the Chinese market, but also surpass it with the same growth in the years to come.

“India’s toy retail sector is estimated at around Rs 15,000 crore and we expect CAGR growth of 20% in the near future,” Kachru said.

The better infrastructure and cheaper labor costs in India are also a green light for manufacturers who want to increase their production. Moreover, the government has also announced the creation of toy clusters to help the toy production process.

“The only issue that comes to mind would be the high cost of real estate in setting up a new project, but even that is supported with the new toy groups popping up all over the country where the government provides land and other amenities on subsidized rates,” said Gambhir of Gulshan Industries.

NEW DELHI: India’s toy manufacturing industry has experienced a new era since the Center banned the sale of uncertified toys and imposed heavy tariffs on imports. Over the past three years (FY2019-FY2022), the import of toys in the local market has decreased by 70% while there has been a 61% increase in exports, according to government data. Despite this significant turnaround, India needs to overcome a few more hurdles to claim global dominance in this industry, which is expected to grow from $141.08 billion in 2021 to $230.64 billion by 2028 at a CAGR of 7 ,30 %. According to industry experts, small manufacturers are unable to switch to machine production because the taxes levied on the equipment are high. There has been an increase in the production of electronic and battery-powered toys in India, which used to be mainly imported. However, most small toy manufacturers do not have the necessary equipment to produce electric toys and are reluctant to upgrade because the equipment is subject to a 34% import duty. Even though the Bureau of Indian Standard (BIS) has granted over 800 licenses to toy producers, many of them have struggled to keep up with regulatory changes and adhere to BIS standards. This has been a problem for small retailers who are facing shortage of supply as they are unwilling to buy substandard product and therefore rely only on large companies to produce and supply quality products. Uncertainty over import duties The industry is also concerned that the government will make changes to the current tax system, which has given it a competitive advantage. The fear comes as the Center has flip-flopped in other sectors and India’s efforts to reduce dependence on China have come largely because of a border dispute. which is getting worse. In 2020, the Indian government increased customs duties from 20% to 60% combined with BIS certification requirements. This has slowed the flow of low-quality imported toys, especially those from neighboring China, to the Indian market, to the benefit of local toy manufacturers. “If they were to relax these regulations after a few months, the manufacturers would suffer a great loss. There has already been an investment of lakhs in machinery. If Chinese products were to be supplied to the Indian market again, our sales would decrease as their cheaper prices would remain attractive regardless of the harmful quality,” said Vipin Nijhawan, vice president of the Toy Association of India. The sudden change in regulations has been a boon for Indian toymakers, but at the same time it has also led to supply shortages and price spikes. Smaller retailers have faced issues with product acquisition. Rising price of raw material Sanjay, owner of Sanjay Toys in Delhi’s famous Jhandewalan market, said: “Plastic has also become expensive and shorter supply with higher demand has prompted manufacturers to increase their margins, even increasing the wholesale price. Polymer prices, according to industry estimates, in 2021 have jumped between 40% and 100% depending on the grades. Addressing the issue of the price spike, Gulshan Gambhir, Director of Gulshan Industries, said, “There has been a price spike, but it is something that is due to macro/covid related factors which have led to a rise in raw material prices, but that’s something that’s been seen across all industries, so some costs have been absorbed and others passed on to the customer.” According to a FICCI-KPMG report, the industry Indian toy industry, which is currently valued at over $1 billion, has the potential to double by 2025. However, Indian toy manufacturers, who want to dominate this market, are looking for additional support from the Indian government. Sourabh Kachru, Partner, Funride Toys LLP said, “We would like 4 things from the government including more toy clusters to increase production capacity and help create jobs. Toy export subsidies. Toys to be added in all FDA agreements so that our worldwide sales also increase. The Production Linked Incentives (PLI) scheme is also expected to be introduced in toys. Kachru and other manufacturers seem convinced that the Indian toy industry not only has the ability to compete with the Chinese market, but also surpass it with the same growth in the years to come. “India’s toy retail sector is estimated at around Rs 15,000 crore and we expect CAGR growth of 20% in the near future,” Kachru said. The better infrastructure and cheaper labor costs in India are also a green light for manufacturers who want to increase their production. Moreover, the government has also announced the creation of toy clusters to help the toy production process. “The only issue that comes to mind would be the high cost of real estate in setting up a new project, but even that is supported with the new toy groups popping up all over the country where the government provides land and other amenities on subsidized rates,” said Gambhir of Gulshan Industries.

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