Toys association seeks rollback of customs duty hike

PTI, Feb 18, 2020, 12:09 PM IST

Mumbai: Seeking a rollback of the steep hike in import duty on toys to 60 per cent from 20 per cent in the Union Budget 2020-21, the United Toys Association (UTA) on Monday warned that the prices of toys could go up by almost 100 per cent besides job losses due to the move.

The association, which claims representation of over 1,300 toys’ traders and retailers in the city, later also protested the government’s decision by wearing black bands and holding placards, at the city’s Azad Maidan on Monday.

Imports account for almost 85 per cent of the total toys’ demand in the country and only the remaining 15 per cent of the sale is met by the domestic manufacturers, according to the industry.

As much as 75 per cent of the total imports are from China.

“In the last year’s Budget, the import duty was hiked to 20 per cent from 10 per cent but we did not pass it on and absorbed it. However, this year, it has been increased to 60 per cent, which is three times or 200 per cent more of the existing import duty on toys. As a result of this massive hike, the toy industry is on the verge of dying. This is a serious issue that the government needs to consider. We urge the government to roll it back in the interest of the children and the industry,” United Toys Association President Farooq M Shabdi told reporters here.

The import duty on toys has increased by up to 500 per cent in the past two years, he added.

He also said the country may face demand crunch in the next 3-4 months as the traders and retailers will not be in a position to afford such a massive hike and may be forced to stop imports altogether while the domestic manufacturers do not have the capacity to meet the demand.

He said that though the outbreak of coronavirus has not impacted their business from China so far, but did not rule out the possibility in the months ahead.

The traders and retailers keep stocks only to meet the demand for the next 2-3 months, according to the association.

Moreover, the increase in import duty may also lead to a sharp 100 per cent rise in the maximum retail prices of the toys as the traders’ and retailers’ margins will squeeze further, he said.

According to Gulshan Hasija, the industry has already seen a 10-15 per cent fall in volume besides profits going by as much as 25 per cent in the past one year due to weak demand amid the economic slowdown.

“We are against such unjustifiable hike in import duty on essential commodities that are not manufactured enough in India,” UTA Vice-President Abdullah Sharif said.

The move will also hurt over 5 lakh toy traders, retailers, among others, across the country, the association said adding that as the toy prices soar and sales decline, their livelihoods will be adversely affected by the move and it could lead to the closure of businesses and unemployment.

Stating that since the major type of toys manufactured in India is non-function ones and board games, the association said the impact of the hike would be felt more on innovative toys such as stem toys, robots, radio and battery-controlled ones.

The lack of research and development and designing facilities have prevented the domestic manufacturing of the toys, according to Hasija.

“Design and mould are the major part of the production. In our country, there are no (specific) toy designing institutes. These two things are the most important for toys’ production,” Hasija said.

Moreover, the domestic production of toys is not economically viable due to the high cost unless there are volumes, Hasija added.