Toy Industry in India on the Verge of Collapse and Requests Government to Enable Ease of Doing Business for the Sector


The COVID-19 pandemic has impacted industry across the world and the toy industry in India is no exception. Sales since the beginning of 2020 have already seen a huge revenue loss. The Indian toy industry though nascent has a huge potential to grow; it already has USD 450-500 million turnover and employs millions of people directly and indirectly. With a young demographic where 26% of Indians are under the age of 15, the industry can provide unlimited opportunities for employment, trade, manufacturing, and export.

The government has been rightly directing the Indian Toy industry to become more competitive, especially in the global arena. However, this cannot happen instantly, and the industry would also need the support of the government to enable ease of doing business in the country. The Quality Control Order (QCO), 2020 issued by the government in February this year is a move in the right direction. However, the complexity of Scheme-1 of the QCO and the challenges in adhering to its 1st September 2020 timeline will have a devastating impact on the small and medium sized toy manufacturers, importers, traders and retailers in the country, leading many to close their business.
The current rules governing the import of toys that are in place are with the same quality tests under the new QCO. Under the current rules, the toys are tested by professional laboratories accredited to NABL (The National Accreditation Board for Testing and Calibration Laboratories). NABL is Mutual Recognition Arrangements (MRA) signatory to ILAC (International Laboratory Accreditation Cooperation) as well as APAC (Asia Pacific Accreditation Cooperation) for the accreditation of Testing and Calibration Laboratories (ISO/IEC 17025), Medical Testing Laboratories (ISO 15189), Proficiency Testing Providers (PTP) (ISO/IEC 17043) and Reference materials producers (RMP).
A similar rule can be brought in for domestic manufacturers. This will also boost the export of toys as the prospective overseas buyers will have more confidence once the certification is from a laboratory accredited to NABL through the MRA to ILAC and APAC.
Such MRA reduces technical barrier to trade and facilitates acceptance of test/ calibration results between countries which MRA partners represent.
All imported toys in India including leading brands of the world are currently being tested as per the BIS rules laid down since 2017. In fact, the testing samples are now drawn by Indian Customs Officials from the actual items that are imported and not from production lots. This is a completely secure, tight and fair system of ensuring the same quality standards without any interference.
Under the new QCO, each manufacturer, within India and overseas, will have to invest in infrastructure to set up an in-house laboratory, employ the relevant people to man the same and supervise the same is functioning as prescribed – This is not the core activity for a toy manufacturer. These in-house laboratories will perform the same tests as are now being done by professional laboratories.
The new QCO does not change the testing standards; these standards are already established. It is an added burden by way of costs, fees, related unnecessary compliance costs and efforts which are not the core activity for a manufacturer as these manufacturers are already doing third party testing as per the international norms for their products. A lot of International brands will vanish from the shelves of Indian toy stores and the Indian child will be deprived of these toys.
Are the toys going to become “more safe” if the testing is done in-house – after investing in laboratories, manning, supervising, inspection, licensing fees, approval charges, renewal inspections, renewal fees? NO – They will just become more expensive.
Are the toys that are being tested now by professional laboratories “less safe”? NO – In fact, by testing in certified third party professional laboratories ensures an unbiased, neutral test free from any kind of interference.
The implementation date of September 1, 2020 is an impossible timeline for the industry to adhere. This is all the more challenging as the Bureau of Indian Standards (BIS) has only 2 to 3 accredited labs which are fully functional to take the huge overload of testing across more than 5000 factories from the industry both in the country and overseas. This combined with the compulsory inspection and audit of factories before the license is granted will make it absolutely insurmountable for the industry to comply. In the context of the pandemic where travel is restricted both within and outside the country, the industry has not been given a clear response on how the audits will be managed by BIS. In addition, the Product Manual by BIS was finalized only on August 21, from less than two weeks to the QCO implementation date. How an in-house lab set up can happen in less than two weeks, what are the equipment required, where can the equipment be purchased, what kind of technical manpower is required, how can all the procedural formalities can happen in less than two weeks, all these are practically impossible.

This is just another way for the government to earn more revenue by way of application fees, inspection fees, license fees, renewal fees, etc., that will add to the cost of the product and burden the common man.

The government should do away with them completely as the net result of an in-house laboratory test against the current third party test is the same. In fact, the results of testing by a certified professional laboratory lends more credence to the quality standards.

At the very least, in these desperate pandemic times when the entire trade and all stakeholders – manufacturers, importers, exporters, distributors, retailers, all their employees, are struggling for survival, suspend this QCO order for at least a year to begin with, and constructively engage with all the stakeholders of the industry to formulate a comprehensive policy for domestic and overseas manufacturers based on the rules that are already in place since 2017. There is no need to add the burden of all the above mentioned costs of in-house laboratories to the products that are already a price sensitive commodity. These costs will only burden the end user.

The toy industry is already witnessing a slowdown due to the COVID pandemic owing to slower consumption. Implementation of this unwarranted QCO would lead to a huge loss to the industry, especially to the small and medium sized manufacturers, importers, distributors and retailers. This is clearly a recipe for business shut downs, job losses, bread earning for millions of people connected to this trade and would add to the hardships faced by the manufacturers, importers, traders and retailers, and their employees across the country.

Eventually this would lead to the immediate stop of the Toy manufacturing units and the Import of Toys in India and would create a sudden halt in the supply line of the very delicate Toy Ecosystem. This would lead to majority Retail shops shutting down along with the collapse of the entire distribution network resultant by the lockdown of factories and Imports. The result of the same would lead to a millions people being unemployed.

Most of the industry associations have requested DPIIT on prior occasions for a roll back of this order as the very product of Toys with the huge variety it carries and the multiple variants derived out of single product should not be covered under Scheme-1 and a sufficient time frame of least one year should be given for a changeover as is the advice of all leading BIS consultants. The very existence of all manufacturing units with effective age old non documented Quality control systems cannot immediately be made to comply with unnecessary fancy lab equipment in terms of running expenses and investment for no benefit to anybody.

AITBA_Press Note_25-Aug-2020