Toymakers Face New Tariffs & Trade Barriers in India

india-flagMarch 3, 2020 | The toy industry is encountering new trade issues in India, as the country continues to step up its protectionist trade policies.

Among the changes impacting the toy industry is the implementation of its second toy duty increase in two years. The latest tariff has upped the rate from 22 percent to 66 percent (including GST) and took effect on February 1.

In response, The Toy Association is working in conjunction with our international trade association partners in India, the E.U., and elsewhere to coordinate advocacy against these tariffs. In the U.S., The Toy Association is also coordinating with federal officials as trade negotiations with India continue. This has, however, been complicated by India’s recent “Made in India” push to promote India manufacturing, driven by a strained relationship between China and India and budgetary concerns. President Trump commented on the tariffs during his recent trip to New Delhi, but thus far no action has been taken.

The new tax on toys could lead to a 100 percent surge in Mean Retail Prices (MRPs) on toys already in the Indian marketplace and put the burden on the customer, according to Farooq M Shabdi, president of United Toys Association of Mumbai. He also noted that innovative toys, such as STEM toys, robots, flying toys, and R/C toys, could see the biggest impact because these toys require parts not manufactured locally.

Additionally, a new quality control order now mandates the importer pay for factory audits and that imported toys bear a “standard mark” to certify the toy complies with Indian standards. To obtain a standard mark, the applicant must register the product in question by brand and model number, make a self-declaration of conformity, submit test reports to the Bureau of Indian Standards (BIS) for consideration, and submit an application – all prior to the conduct of an on-site audit and verification testing by BIS. The quality control order was finalized shortly after comments were submitted by The Toy Association and others. Proposed changes were not incorporated.

“It is frustrating to see how these international protectionist trade policies put a needless burden on toymakers with redundant testing, additional fees, and unnecessary conformity assessment steps,” said Alan Kaufman, senior vice president of technical affairs at The Toy Association. “We remain optimistic as India and the U.S. work together to resolve trade differences, actions will be taken to remove these trade barriers. Until then, The Toy Association, along with its partners overseas, will continue to monitor these regulatory changes and educate the Indian government on the impact these actions have on the global toy economy.”

Toy Association members are encouraged to join the Federal Government Affairs Committee to receive critical updates and developments on these and other regulatory issues.