Toy manufacturers have requested the government to address the “anomaly” in the Good and Services Tax that is applicable to the sector and early roll-out of the Production Linked Incentive scheme as it gets ready for the next phase of growth offered by the enabling environment created in the last few years.
The industry is seeking redressal of the issues created by different rates of taxation for different categories of toys which is impeding the process of going up in the value chain for the sector.
“Mechanical toys attract 12% GST while tax on electronic toys is 18%. A mere addition of a bulb or a sound mechanism changes the classification of the toy. This itself is acting as a barrier to many more companies moving to manufacturing of more sophisticated toys,” Chairman of the Toy Association of India Manu Gupta said.
Around the world electronic toys are 70% of the market and the differential duty structure is acting as a barrier to address this huge segment. “Only 200 out of the 7000 members of the association manufacture electronic toys,” Gupta said, adding that the demand for addressing the different tax rates in toys was raised at the meeting organised by the Department for Promotion of Industry and Internal Trade (DPIIT) on Saturday here.
He said apart from rates a clear definition should also be laid down on what constitutes an electronic toy. Gupta said that the demand for removal of GST anomalies in the sector have been pending for long.
At the meeting the association also asked for early rollout of PLI for toys to take advantage of the enabling environment provided for the sector by higher duties and quality control orders.
Apart from the quality control order of 2021, to curb imports and support the manufacturing of toys, the government hasd increased basic custom duty to 66% from 22% in 2020-21. In the budget for 2023-24 this was further raised to 70%.
Apart from the representatives of the government and the toy association, the meeting also saw the participation of top global retailers like Hamleys, Walmart, Ikea, Lego, Hasbro, Spinmaster, IMC, Lulu, Simba Dixie and Sanrio. The Indian manufacturers who were part of the discussion toy makers from India include Microplastic, Aequs, Funskool, Playgrop, Dreampalst, OK Play, Universal, and Play Shifu.
Chief coordinator of the association Amitabh Kharbanda said the top retailers of toys have expressed their willingness to increase sourcing from India. Some of the top ones like Ferraro, Ikea, Walmart, Hasbro, Simba Dixie, Spinmaster already have purchase offices in India and are buying from local manufacturers .
“Indian toy market size is Rs 16,000 crore which is 0.5% of the global market that is around $120 billion. If we increase our share, it will have a significant impact on the industry,” Kharbanda said.