Gujarat toy industry shudders at VAT levy

The 180-crore toy market of the state will be ruined if sales tax on toys is raised to 12.5 per cent from the current zero per cent, following the implementation of value-added tax (VAT), said toy makers.

Talking to Business Standard, R K Verma, president of Toy Association of India, said, "Sales tax on toys is only four per cent in rest of the country. And with an increase, we will not be left with any customer. This will hinder the toy market in the state."

Verma, in the city to participate in the international toy workshop 'Toys for tomorrow', organised by NID, said that Gujarat accounts for about 10 per cent of the Rs 1,800-crore Indian toy market. The country accounts for about 0.1 per cent of the world toy market.

However, the unorganised sector is much bigger than the organised one here, he added.

The workshop, second in the series, started on Wednesday and will continue till Saturday. Toy designers, researchers and educationalists from countries such as Germany, US, Sweden, Thailand, Italy, Belgium and India, are participating in the workshop.

"The aim of the workshop is to create a forum to facilitate and exchange cross-cultural experiences, action plans and explore the possibilities of making better toys, " Sudarshan Khanna, head- toy centre of NID, said.

The domestic toy market has been growing at 20 per cent every year.

In 2004, the country exported toys worth Rs 120 crore.

The exports figure for 2005, expected soon, will be much higher as Noida-based toy maker Hanung alone exported toys worth Rs 120 crore last year, Verma added.

"Around 60-70 per cent of Indian toys are exported to the US and Europe, " he added.

Another participant, Shefali Tokas, trade promotion officer of Sports Goods Exports Promotion Council, quoting a UN report said that Indian toy exports were worth $23 million in 2004.