Toy MSMEs fear immediate pressure to comply with BIS norms may trigger shutdowns; seek up to 2-year time

The government on August 21 had mandated manufacturing and import of toys to pass through necessary quality norms from September 1 onwards.

Ease of Doing Business for MSMEs: MSMEs in the toy sector have sought an 18-24-month extension to comply with the Bureau of Indian Standards (BIS). The government on August 21 had mandated manufacturing and import of toys to pass through necessary quality norms from September 1 onwards. However, MSMEs are apprehensive of getting BIS certification right away amid financial crunch and drop in demand due to the Covid pandemic. The request from MSMEs came two days after Prime Minister Narendra Modi in his monthly Mann ki Baat address stressed on India to become a global toy production hub. A day earlier, he had also urged toy startups to innovate in order to boost manufacturing and global imprint of Indian toys. BIS is the government’s nodal agency for standardisation, marking and quality certification of goods.

However, immediate compliance with the government’s latest norm may even lead to the closure of small enterprises, according to the industry body for toys — All India Toys Federation (AITF). “We need an additional 18-24 months to ensure that all micro, small, and medium toy enterprises can rise to this challenge…We fear that such measures can hinder PM Modi’s vision, causing smaller units to shut down. We’d be left with only big MNCs, who will sell expensive branded toys in their store chains,” said Abdullah Sharif, Vice President, AITF.

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Very few Indian and almost none of the foreign manufacturers could apply for the BIS certification because of multiple clauses such as quality requirements, setting up testing labs, and the time-consuming process for certification, according to Sharif. He proposed BIS accredited labs to test toys as per established standards instead of requiring the businesses to set-up labs. Sharif also added that collaboration with existing labs will help them focus on “building a toy arsenal for the depleted Indian market.” According to AITF, the BIS certification process requires 120 days for domestic manufacturers and up to 180 days for foreign manufacturers.

Finance Minister Nirmala Sitharaman had in February this year proposed a hike from 20 per cent to 60 per cent on imported toys from the new financial year in order to boost domestic manufacturing and Make in India initiative. “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, AITF told Financial Express Online.