India toy story: More questions than answers on sector reforms
Rapid and mammoth changes could kill this once widespread cottage industry in the country
Will the local toy industry be able to survive the massive changes? Source - IBEF
India’s toy industry was almost wiped out by the surge in imports from China over decades, but steps taken by the government of India to structure and reform the sector could stifle small household artisans and strangulate the already-struggling industry.
In an attempt to push local manufacturing and curb imports of often substandard toys, the government has brought in several reforms in the mal-developed under-represented toy sector of India. However, India does not seem to be ready for such a change, considering the massive need and low-purchasing power of customers and the widespread production of toys – often a representative of folk art and cottage industry.
Following intervention by the government, toy imports to India fell 70% in the last three years — from USD371mn in FY 2018-19 to USD110n in FY 2021-22. However, the impact on Make in India is also likely to be negative.
The latest move to regularise the sector is BIS standards on safety of toys – physical, chemicals, flammability, electrical, etc. The new rules make it mandatory for toy makers to follow the rules, get the certification, and use the ISI mark.
The government said, “It is mandatory for toys to conform to Indian standards for safety of toys and bear the standard mark (ISI mark) under license from BIS as per Scheme–I of BIS (Conformity Assessment) regulations 2018, and no person shall manufacture, import, distribute, sell, hire, lease, store or exhibit for sale any toys without the ISI mark.”
The government also has curbs on imports. It said, “Under the BIS Product Certification scheme, only those foreign manufacturers whose manufacturing and testing capability has been assessed as satisfactory by BIS will be able to obtain BIS licence and thereby, export toys to India.”
These steps will not only increase the cost of toy making – unavoidable red tape, delay in approvals, corruption, and production and channel costs, but also threaten the very existence of small toymakers that are unaware of the changes and do not have the wherewithal to get the approvals.
In turn, India’s toy industry could lose on competitiveness again, given Chinese manufacturers could scale-up easily. The handicraft small scale workers could lose their livelihood forever, apart from loss of traditional art.
As per government data, there are 8,366 MSMEs in India under the National Industrial Classification Code 2008 (NIC 2008) for toy manufacturing (codes number 32401, 32402, 32403, 32404,32405,32409). However, local manufacturers of toys for festivals should be several times more than that number.
The Minister of State in the Ministry of Commerce and Industry, Som Parkash, told the Pariliament recently that under the Scheme of Funds for Re-generation of Traditional Industries (SFURTI) of the Ministry of Micro, Small & Medium Enterprises assistance is provided for creation of common facilities centre with latest machines, design-centres, raw material bank, skill development, etc. A total of 14 toy clusters across the country have been approved under the scheme benefitting 8,839 artisans with an outlay of about Rs.41.60 crore.
The BIS also made special provisions on 17 December 2020 so as to grant license to micro scale units manufacturing toys without testing facility for one year and not to insist on establishing in-house facility.
This looks grossly insufficient and could put the livelihood of millions of toy artisans in jeopardy. Much more needs to be done.
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