Toy Cos In Talks With Wal-Mart For $10-M Deal

New Delhi, May 26: | Updated: May 27 2003, 05:30am hrs
Indian toy companies are in negotiations with US-based $244-billion Wal-Mart Stores for supply of toys worth $5-10 million (Rs 24 crore-48 crore). According to a joint secretary in the ministry of commerce: The Indian toy-makers are at a very advanced stage of negotiations with Wal-Mart and we expect a break-through by September-October this year. The vendor deal is expected to be around $5 million-$10 million. He added that they (Wal-Mart) would look at a couple of vendors in each sub-categories like family game, inflatable balls etc.

This is possibly the first time that Wal-Mart has shown interest in sourcing toys from India. The retailing MNC has in the last few years turned to China for its multi-billion sourcing of a range of goods, including competitively-priced toys. Representatives of India-based Wal-Mart WMGS Services Ltd were not available for comment.

Industry observers say that Wal-Marts interest in Indian toys could give a much-needed boost to the struggling domestic toy industry. The competitiveness outlook could also bring new investors and lead to the setting up of adequate infrastructure.

Says KSA Technopak head Arvind Singhal: The entry of global brands certainly enthuses investors. But retailers like Wal-Mart look for huge volumes, which cant be met by small-scale industries. To emerge as attractive as China, India needs to change its small-scale mindset and encourage large scale investments.

Wal-Mart pursues a very stringent vendor standards programme. In 2001, 120 factories worldwide failed to meet its supplier standards.

The store chain enjoys the reputation for sourcing the products at most competitive costs as well as enforcing strict supplier standards, which include those of child labour, compensation, working hours, discrimination, workplace health and safety and environmental concerns.

According to the Toy Association of India (TAI), which has around 700 members, domestic toy sales were hit hard post-1995, when cheap Chinese imports, especially electronic toys, started flooding urban markets.

Depressing conditions sent around 15 per cent of manufacturing plants out of business, says TAI president Vishnu Swarup Agrawal. However, this craze for cheap imports is coming down now and we expect a healthy growth this year.

The toy industry is expecting to post exports of over Rs 250 crore in 2003-04 up from Rs 150 crore in 2002-03.

Mr Agrawal said that some new developments point to the recovery of the toy industry. Following the setting up of Rs 10.2 crore joint venture project National Programme for the Development of Toy Industry by UNIDO (United Nations Industrial Development Organisation), Sido (Small Industries Design Organisation) and TAI, a sharper focus has been put on the infrastructure development (tooling and testing for international certification), design facilities and market linkages.

He said: In all, 10 entrepreneurs are working to create new designs for the Indian toy industry, under NIFT (National Institute of Fashion Technology). Recently, we secured a business of Rs 150 crore from a participation in a German fair. And now weve formed a common platform with handicrafts (excluding carpets) and sports industry to promote our exports under Spot India 2003, which is expected to bring 4,300 foreign buyers.