Heavy imports duty impacting toy industry: ASSOCHAM

The Dollar Business Bureau

The toy industry in India, which is dominated by MSMEs, is struggling hard to survive because of huge imports duty, revealed a latest statement by ASSOCHAM.

ASSOCHAM, in a paper on India’s toy industry, said that the games, toys, sports equipments, parts and accessories fall under the Heading 95 of HSN Chapter, however, several raw materials used in manufacturing these toys comes under varied chapters and are imposed with different Import Duty rates. Therefore, the input cost of making toys in India is quite high as compared to the imported toys.

“There is an anomaly — importing of toy attracts 5 percent duty, whereas importing raw materials for domestic manufacturing attracts 20-30 percent duty, making domestic production costlier,” said Sunil Kanoria, President, ASSOCHAM.

It is interesting to note that for a nil duty on the parts, effective duty rate on such type of part is almost double compared to a finished toy, he added.

As there is non-availability of several quality raw materials, manufacturers in India have to import these raw materials in order to maintain the quality of finished products. Therefore, the effective difference to manufacture toys in the country using such raw materials is quite high and this puts a negative impact on the toy manufacturing sector growth in India. If corrective measures are not taken immediately, small and tiny manufacturers will not be able to survive.

India’s toy industry is highly unorganised, fragmented and is dominated by MSME manufacturers. Domestically manufactured toys make up only 15 percent of the Indian toy market while the remaining market is dominated by imported toys from nations such as China, the UK, the US, Malaysia and Korea, among others.