The differential duty structure is a big challenge for the toy industry: ASSOCHAM


Due to the reverse import duty structure, India’s toy industry, which is dominated by micro, small and medium-sized enterprises (MSMEs), is struggling hard for its survival due to high import duties, reveals the ASSOCHAM’s latest press release.

The Indian toy industry article published by ASSOCHAM stated that although toys, games, sports equipment, parts and accessories are classified under heading 95 of the HSN chapter, many raw materials used in the manufacture of these toys fall under different chapters and are levied different rates of import duty, so the input cost of toy manufacturing in India is quite high compared to imported toys.

The board further states that almost all parts used in toys are specifically classified in a classification other than toy parts, so each toy part must fall under its specific classification, for example, a toy motor must fall of the classification of motors are not toy parts; same goes for screws etc. The duty on these coins can be 0, 5, 7, 5 and 10% + CVD. Also customs duties on toys can vary from 0 to 10% with exceptions.



There is an anomaly: the import of toys is subject to a 5% duty, while the import of raw materials for domestic manufacture is subject to a 20-30% duty, which makes domestic production more expensive, said Mr. Sunil Kanoria, President of ASSOCHAM.

It may be worth noting that for zero duty on parts, the effective duty rate on such a part is more than double that of a finished toy, Mr. Kanoria said.

Due to the unavailability of many quality raw materials in the country, manufacturers have to import them to maintain the quality of the finished product. It can be seen that in all these cases, the effective difference for manufacturing toys in India using these raw materials is very high, which has a negative impact on the growth of the Indian toy manufacturing sector. Rather than earning foreign exchange through exports, the country loses so much through imports.

Unless immediate corrective action is taken, the makers of Tiny & Small cannot survive.

India’s toy industry caters to nearly four million 12-year-olds across the country, but toys made in the country only make up a measly 15% of the market and the rest of the market is flooded. of toys imported from countries such as China, United States (US), United Kingdom, Korea and Malaysia, among others.

The toy industry in India is very fragmented, unorganized and is mainly dominated by micro, small and medium enterprises. In addition, there are nearly 2,000 units in the organized sector. The toy industry employs almost 25,000 people in the organized and unorganized sector. Nearly 70% of the toy market in India is unorganized.

The emergence of video games has shaken the toy industry across the world, as there is an obvious shift from traditional toys and games to video games. As a result, international toy manufacturers have also expanded their activities in the video game segment.

ASSOCHAM suggests that the government should undertake training programs and set up training centers for these workers to train them to be able to increase their efficiency and productivity. Trade reconciliations for the toy industry, both at state and national level, are suggested by ASSOCHAM.

The government should provide easy credit facilities to the toy industry and marketing assistance like bar coding and ISO certification for Indian toys. ASSOCHAM suggests that the government create ways and means by which talented toymakers, innovative pedagogues and committed designers come together to save the sector from our design heritage.

There should be cluster based development programs for the toy industry as it is very fragmented and unorganized. Special assistance, grants and government financial support are suggested by ASSOCHAM to upgrade the industry’s technological, research and development facilities to match its international counterparts.

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