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Import of Chinese toys a tell-tale sign of a weak Indian manufacturing

Last Updated on July 6, 2020 at 12:33 pm

Amid the rows of shops in busy Sadar Bazaar in Jalandhar is a small toy store structure of Ram Kishen, 42. Sitting on his worn out leather chair, he scribbles the number of boxes he procured from a toys wholesaler in New Delhi.

Most of the toys that Kishen’s procures from New Delhi have a stamp of ‘Made in China’ on them. Cheap Chinese toys are preferred by the retailers in India since years and this is the reason that Indian manufacturers of toys have mostly turned into dealers.

The mounting tension between India and China over the Galwan incident in Ladakh has also brought the focus on the booming toy industry of China that has literally wiped off the Indian counterparts due to their cheap cost. However durability of Chinese toys has always been questionable, but the majority Indian middle-class mostly prefers cheap toys.

Ever increasing imports of Chinese toys

According to the data of Ministry of Commerce and Industry, imports of Chinese toys to India in year 2004-05 was only Rs 103 crore that increased to 169 crore next year in 2005-06. Imports of toys from China further increased to Rs 305 crore in year 2008-09. This was the time when trade deals were being signed between India and many other countries and the Indian economy was flexing its muscles.

Import of Chinese toys witnessed a further jump in year 2011-12 when the imports reached Rs 869 crore. The import figures witnessed a major thrust the following year in 2012-13 when toys worth whopping Rs 1162 crore were imported from China into India. The number further increased an in year 2015-16 Chinese toys worth Rs 1879 crore were imported in the country.

The imports of Chinese toys in 2017-18 was Rs 1696.64 crore and in year 2018-19 imports reached Rs 1827.75 crore.

Cheap Chinese toys preferred over Indian goods

While there is rhetoric over boycott of Chinese goods, there is no end in sight to the purchase of Chinese toys by common people. Not only directly from markets but Chinese toys are purchased by Indians even on online retail websites, data of which could not be accessed.

Ram Kishen says that people often visit his shop to buy remote control toys that are mostly manufactured in China. “The Indian toys are comparatively triple the cost of the Chinese toys. Say if you get a remote control car manufactured in China for Rs 500, the cost of the same product manufactured in India will be more than Rs 1500. Not only this, you get free batteries with the Chinese remote control car while you need to buy the same for the Indian product” said Kishen.

He says that the margin in ‘Made in China’ goods is also more for the shopkeepers due to which the sale of these products is higher. Indian products are generally costlier but are more durable, says Kishen and instantly adds “who needs durability when you get cheap toys”?

Chinese remote control cars a hit

Remote Control cars from China have been a hit in Indian markets due to which their demand is every increasing. While the imports of only these cars from China into India in year 2009-10 was Rs 180.86 crore, it took a steep ascend next year in 2010-11 and reached 346.21 crore.

The demand of these toy cars in the market could be gauged from the fact that out of the total Rs 1162 crore imports of toys from China in year 2012-13, remote control cars worth Rs 742.84 crore were imported in India. In 2018-19 the import of toy cars was 508.97 crore.

Suspicious imports from Sri Lanka

There has been a sharp rise in import of toys from Sri Lanka as well that has raised some suspicion among the manufacturers of India. Toy manufacturers believe that it was China that was using Sri Lanka as its proxy and misusing the South Asian Free Trade Agreement (SAFTA). After the SAARC countries signed the agreement, free trade of many commodities was allowed.

It is alleged that China dumps its goods in Bangladesh and Sri Lanka that are then exported into India. With little or no duty through the SAFTA route China is able to reap benefit at the cost of India, it is alleged by manufacturers.

Official figures suggest that there is something suspicious as in absence of a toy manufacturing hub in Sri Lanka, the country was able to increase its exports to India. Import of toys from Sri Lanka into India in year 2005-06 as per official records was only Rs 3.92 lakh which suddenly jumped to Rs 8.80 crore in year 2010-11. In year 2013-14 the import of toys from the country further increased to Rs 14.25 crore and to a whopping 52.94 crore in year 2018-19.

Even the government of India was now looking into the complaints of the industrialists who have alleged that China was misusing SAFTA route for its own interests.

Cheap labour in China is the key

When one visits a port in any coastal Indian city, containers filled with Chinese goods are found in abundance. One would wonder as to why China sends so many containers filled with manufactured goods. The answer to this question is ‘dumping’.

Experts say that China knows the game of dumping in which it does mass production of goods and then send it to another country on cheap prices. It is a fact that when production is done of a large scale, the cost of production drastically comes down. This is the principle on which China works.

On the other hand China has one of the cheapest labour in the world due to which production of electronics including toys is cheap in China. While China also increases labour wages every year but the hike in India is more as compared to the dragon.

Govt must intervene

Gurmukh Singh, a wholesaler of Chinese toys in Dwarka of New Delhi says that the government must intervene and levy heavy import duty on Chinese toys that are so cheap. “Indian manufactured toys cannot compete with the Chinese ones. There is a huge different in cost of both the products due to which wholesalers as well as retailers prefer Chinese toys because that is easy to be sold and their demand is also high in all parts of the country” said Singh.

Abdul Mustafa another wholesaler in the same area says that government must help by providing subsidies and better infrastructure to the Indian toy makers so that they can compete with the Chinese product. “Supply chain, infrastructure, facilities which the Chinese manufacturers get is far ahead than their counterparts in India. Indian toy makers are still struggling with poor infrastructure and high cost of raw material including plastic that is very cheap in China” said Mustafa.

Standing committee of Parliament

In 2018, a standing committee on commerce in its report had stated that trade between India and China increased by 51.6 billion dollars from 2007 to 2018. More imports were increased than exports. The standing committee commented on anti-dumping duty, smuggling, poor quality Chinese goods among other factors that it asked the government to look into. However no strict action has so far been taken against these factors and no policy on quality control of the products imported from China has been put in place.