India markets close in 1 hour 37 minutes

Toy MSMEs ask govt to rollback 200% import duty hike; fears unemployment, business shutdown

Sandeep Soni

GST and Taxation for MSMEs: The proposed import duty hike on toys will adversely affect over 1 lakh toy retailers in India. Indian toy market dominated by MSMEs importing toys mostly from China might have to shut down businesses as the hike will make toys unaffordable for customers, according to Abdullah Sharif, Vice President of the newly formed United Toys Association of Mumbai. Finance Minister Nirmala Sitharaman had proposed a hike from 20 per cent to 60 per cent on imported toys from the new financial year.

"The market will not be able to absorb the price. We are wondering whether toys could be sold at increased prices. For instance, good selling toys such as doctor sets which are sold at Rs 100-150 currently will be sold for Rs 300-350. Battery operated toys are usually that expensive but if non-battery toys would be priced at that level, customers may not buy them," said Sharif.

MSMEs fear that the proposed hike might also cause unemployment if they go out of business even as it might go against the government's Make in India initiative to boost domestic businesses with relaxation in compliance and selling products at affordable costs. "The import duty has been increased by around 500 per cent in the last two years. From 10 per cent two years back, it was increased to 20 per cent and now it will be 60 per cent. The livelihood of employees in the toy sector is at risk," Rehan Dorajiwala, Member, United Toys Association of Mumbai told Financial Express Online.

Also read: Small businesses had 69% less opportunity to network with government buyers and sell products in FY19

Another example would be the cube — among the most selling toy online, according to Dorajiwala. The cube is sold for at least Rs 45 currently would now be priced around Rs 80. Currently, 85 per cent of toy businesses in India are importers while 75-80 per cent of this 85 per cent are MSMEs, he said.

During Nirmala Sitharaman's recent visit to Kolkata where she met industry representatives, the West Bengal Exim Association had raised the issue of increased import duty and sought its rollback. "The association was informed to get in touch with the Joint secretary of the Commerce Ministry. On Monday, we had also given the letter seeking withdrawal of the increased duty," said Dorajiwala.

The imports from China are around 75 per cent annually even as the "quality and variety of international toys is superior to those manufactured in India, also the imported toys are more affordable," said a statement by the association. It has sought treatment of toys as an essential commodity having similar relevance for a child as an educational book as STEM toys, flying toys, model Kits etc. are considered more of educational tools for children to enhance their cognitive skills, it said.