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This article is written by Saumya Krishnani who is pursuing a Diploma in Business Laws for In-House Counsels from LawSikho.

Introduction

The increasing demand for technologically-driven toys has resulted from the transition from conventional to electronic toys as a result of early exposure to technology. As a result, there is room for the industry to develop and prosper.

Toys have become increasingly important not only for children but also for adults. Adults use toys to reinforce social relations, exercise their minds and bodies, and decorate their living spaces, while children use toys to explore their identities and help grow their bodies. Toys are more than just a source of entertainment; they have a profound impact on almost every aspect of life. Furthermore, a rising proportion of the population uses them, which has an effect on the climate.

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Skilled labor, a diverse product selection, increasing innovation and imagination, and a focus on technology-driven learning and education drive the Indian toy industry. It is expected to expand at a rate of 25% in the coming years, and it is already exporting to a few developing countries around the world. The global demand for toys is vast, with plenty of possibilities for businesses to explore. However, the interests of children, who are the primary purchasers of toys, are shifting at an unprecedented rate. To pique their curiosity, toy makers must produce imaginative toys.

Hike in Toy Manufacturing 

  • India’s finance ministry suggested increasing the customs or import duty on toys like tricycles, dolls, and puzzles from 20% to 60% earlier this year.
  • This will affect toy retailers and wholesalers in India, which imports toys worth INR 25 billion (US$ 340.17 million), with China accounting for 75% of the total (One US dollar equals 73.49 Indian rupees).
  • Unfortunately, under COVID-19, retail toy demand has plummeted, while wholesale toy prices have risen by at least 40% as a result of the import duty hike.
  • India’s toy industry is reported to be worth $1.75 billion.

Update

Toy producers and importers are required to comply with the Bureau of Indian Standards (‘BIS’) in order to follow safety standards when producing or importing toys as a result of this Order. Toy manufacturers and importers will be required to obtain BIS certification before selling their products in the Indian market beginning September 1, 2020. The producers or importers must adhere to the Order’s safety standards for toys, which include mechanical and physical properties, as well as carry the Standard Mark under a license obtained from the Bureau, as per Scheme-I of Schedule-II of the BIS.

Enforceability

For the products or items (toys) cited in the Order, the Bureau, i.e. BIS, will serve as the certifying and compliance authority. BIS officials will physically inspect the plant location/manufacturing unit to ensure compliance with the Order. The products or articles will be tested (as samples) to ensure conformity with the quality/standard in the case of an import shipment.

Applicability

This Order applies to toy producers in India as well as importers who bring toys into the country from other countries. This Order does not refer to products or articles that are made or intended for export.

Effect

From September 1, 2020, no toy manufacturer or importer will be able to sell or import any of the toys or articles specified in the Order without first obtaining a BIS certification. According to Scheme I of Schedule II of the BIS (Conformity Assessment) Regulations, 2018, the Bureau has begun the process of granting licenses to toy manufacturers to use the BIS Standard Mark website www.bis.gov.in.

Registration

Domestic toy manufacturers and/or international toy manufacturers who want to apply for a BIS license should use the certification program, which is available on the BIS website, to apply for a BIS license.

Type

Application Primary Standard

Non-Electric Toys (common toys such as rattles, dolls, puzzles, and so on).

IS 9873 (Part 1):2019

Electric Toys (these are toys which have at least one function dependent on electricity).

IS 15644:2006

Based on the type of toy for which a license is required, manufacturers may select one of the above applicable primary standards when applying for a license. If more than one type of toy requires a license, the manufacturer must submit separate applications for each type. (According to the notice, the samples will be checked by BIS authorities for adherence to the relevant primary and secondary requirements, such as IS 9873 sections 2, 3, 4, 7, and 9, among others).

Startup Cost

Manufacturing costs that are low in terms of expenditure and manufacturing methodologies that are relatively easy in their processes combine to create an ideal process for achieving a business goal of establishing a business in the toy manufacturing industry in India. This is the perfect scenario, with the lowest risk, for a first-time investment. 

Traditional wooden toy plans are readily available on the internet. You will only need a small workshop or garage at first, and only those that are fitted with woodworking equipment such as a hacksaw, hammer, and nail, among other things. You can create a variety of items that will appeal to children. This may include wooden toys such as cars, trains, puzzles, dolls, and bubbleheads, among others. You can also begin producing goods that are typically manufactured from recycled materials as well as those that are simple to manufacture in the same process. Making goods out of recycled wood will not only cut costs, but because the feature of the company is unique, it will be very attractive from a marketing standpoint, allowing you to sell the products as something different from the norm.

On the basis of Quality Control

In India, the quality control department is crucial to the manufacturing process. The number of toys you’ll make in the time allotted is in the thousands, with the hope that they’ll be made and sold right away. Since it is subject to such a big investment, you would expect it to be sold as soon as possible and without further ado. As a result, you won’t have much time to check the quality of your product. As a result, the quality management team must be extremely effective in order to achieve reliable results while still ensuring that the product is delivered on time.

Each division is in charge of keeping track of the samples and the results that have been generated. Quality management protocols are applied as soon as the toys are mass produced on a large scale.

Economics of Business

    • Annual production capacity: 2400 units.
    • Shifting: Full power usage for 300 days a year on a single shift basis. For financial analysis, the unit’s capacity utilization is assumed to be 100%.
    • Salaries and wages, raw material costs, utility costs, civil construction costs, and other costs are likely to differ with time and place.
    • Prices for machinery and equipment are for a specific make/model and are estimates.
    • Costs associated with business unit registration, project preparation, legal enforcement costs, and so on, may be classified as pre-operative expenses if necessary.
    • The percentage indicated for the breakeven point is based on maximum capacity utilization.
    • Term interest rates and working capital loans should ideally be at current rates. It is assumed to be 12% in this article. Otherwise, a 16 percent interest rate may be used on average. The rate can change from time to time depending on the policies of financial institutions/agencies.
    • The project’s critical production machinery and test equipment have been established. To manufacture, the unit may also use common test facilities available at state-run electronics test and development centers and electronic regional test laboratories.

BIS to Grant License 

The Bureau issues a license after a successful evaluation of a manufacturer’s manufacturing facilities, production process, quality control, and testing capabilities at its manufacturing facility. Conformity of the product to the applicable standard(s) can also be determined by third-party laboratory testing, on-site testing, or a combination of the two. The procedure for Grant of License is stated in the guidelines for Grant of License (GoL) as per the conformity assessment Scheme-I of Schedule-II of the BIS (Conformity Assessment) Regulations, 2018. (GoL).

Toy Manufacturing Hub in Noida

The north Indian state of Uttar Pradesh (UP) has established Greater Noida, an urban industrial zone near Delhi, as a potential location for a toy manufacturing hub.

According to the UP-state government and media reports, 92 applications from domestic toy manufacturers have been received to set up units at the centre. Toy manufacturers will be given 100 acres of land with 155 plots of various sizes, with an estimated investment of INR 30 billion (US$ 408.15 million). FunZoo, Ankit Toys, Toy Treasurers, and Funride, among India’s leading toy firms, are said to have applied for plots. The plot sizes vary between 1,000 and 10,000 square meters.

Conclusion 

Electronic circuits, electromechanical hardware components, mechanical assembly, and other sub-assembly parts are assembled according to the specification during the manufacturing process. The electronics assembly—ICs, transistors, diodes, resistors, capacitors, coils, and electromagnetic relays—is then assembled on PCBs according to specifications. The assembled PCBs are put through their paces to ensure that they work as anticipated. The circuitry, electromechanical assembly, hardware like connectors/switches, mechanical assembly, and LEDs are all assembled and housed in a fiber/plastic toy car shell.

References

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