The global supply chain breakdown, reduced production capacity, and a new regulatory landscape may soon cause a toy crunch in India.

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At the beginning of the year, the Centre had announced that no toy would be sold in the country without the certification of the Bureau of Indian Standards (BIS). This standard applies to even those companies that are manufacturing their products abroad.

India has been a net importer of toys, importing nearly 80 percent of its toy requirements. In order to continue the imports, however, inspectors from the BIS would need to visit and certify the factories manufacturing the toys that are being brought into the country. But after the second wave of the COVID-19 pandemic, new travel restrictions across countries and borders meant that the certification process almost came to a halt.

“We were unable to travel abroad from January onwards because of the stricter travel restrictions in some of those countries and also keeping the safety of officials in mind. The situation is gradually improving and we have started the process again,” a senior BIS official told Business Standard.

With a drop of nearly 50 percent in imports of toys between FY20 and FY21, there is a large gap in demand that domestic manufacturers can hope to meet. Large toy manufacturers, like Funskool, have already gotten their certification and thus can hope to see an increase of around 20-25 percent in their sales.

“The reduction in imports has led to a rise in domestic production and also an increase in exports from India. Our company expects an increase of at least 25 percent in exports this year. We also see that there is a lot of rise in investments in the sector post-January 2021,” said R. Jeswant, CEO of Chennai-based Funskool, told Business Standard.

Also read: Funskool become first toy manufacturer to get BIS certification

But at the same time, most of India’s toy manufacturing capabilities are in the unorganised sector. About 7,560 registered medium and small enterprises (MSMEs) are in the business of manufacturing toys, according to the data from Udyog Aadhaar Memorandum. Of these manufacturers, only a small percentage has managed to get their BIS certifications. The main hurdles have been pandemic restrictions, marking fees and enforcement problems.

“Because the stringent guidelines are not particularly MSME-friendly, only around 400 of them have acquired BIS certification so far. This may lead to a shortage,” said Ajay Aggarwal, President of the Toy Association of India (TAI).

India is one of the fastest-growing toy markets in the world. The industry has seen a CAGR of 13 percent, more than double that of the global average of 5 percent. While in the short term, the changes may cause an issue for retailers, over the long term, the industry may see larger investments in order to supply most of India’s growing toy demand.

Also read: Supply chain crisis: Panic ordering by retailers worsening situation, impeding global growth

“Today, we import around 80 per cent of our toys from abroad. Which means crores of rupees of the country are going abroad on them. It is very important to change this situation,” Prime Minister Narendra Modi said during Toycathon-2021, which was jointly launched by multiple ministries earlier in the year.

“In order to take the benefits to these segments, we need to be vocal for local toys,” PM Modi had added.

(Edited by : Shoma Bhattacharjee)

First Published:Nov 9, 2021 7:39 PM IST