Indian markets flooded with Chinese 'pichkaris' (water guns), balloons and colours this Holi, have taken a toll on over 1,000 Indian small and medium enterprises (SMEs) over the past two years and rendered about 10 lakh people jobless, an Assocham survey said Monday.

"Nearly 1,000 SME units have shut down in the last two to three years owing to the rise in imports from China. Manufacturers were forced to stop operations mainly in Allahabad, Brij Mandal (Agra, Hathras, Mathura and Vrindavan), Delhi, Kanpur, Lucknow and Patna," revealed the Associated Chambers of Commerce and Industry of India (Assocham) survey Monday.

"A sharp decline in SME units is creating job losses in the sector affecting over 8-10 lakh people. Even the owners of SMEs are indebted to bankers and moneylenders due to continued loss of business and capital," Assocham Secretary General, D.S. Rawat said.

The findings revealed that an array of coloured powder and squirt guns imported from China has triggered attrition in SMEs operating in towns and cities in northern India.

Releasing the survey analysis, Rawat said the government should impose import restrictions on water toys, and other items that can be easily manufactured in India.

According to several shopkeepers and manufacturers, the invasion by Chinese products has been threatening their daily earnings.

"For the past five years, the business of local sprinklers is decreasing due to stiff competition from Chinese sprinklers. We are facing huge losses as from small plastic sprinklers to colourful perfumed sprays, imported from China, are available in the market," said a manufacturer and trader of sprinklers in Delhi.

However, the Assocham survey revealed that Indian manufacturers were unable to keep pace with innovative Chinese products. For instance, Chinese revolving water guns, bazookas, spray cans and gun splashes have a huge demand in the market.

"Chinese sprinklers are available in different price bands from Rs.10 to Rs.1,000. Although traditional plastic sprinklers from Indian manufacturers are selling in the price range of Rs.5 to Rs.50, people prefer to buy Chinese items as they are innovative," the survey said.

"They come in various shapes and sizes, from the replica of a soft drink to funny goggles, elephant, cartoon characters, flute, watch, mobile phone which spray colours mainly attract children," the survey added.

The Holi accessory manufacturing industry that produces water guns, water balloons, cannons and other toys is likely to touch Rs.10,000 crore this year, while the Indian herbal perfumed colour industry is likely to touch Rs.5,000 crore this Holi.

"Almost all the Chinese products of Holi have been sold out and local products that were purchased from manufacturers in low quantities are still in the stock. Last year, the ratio of sale of Chinese and Indian sprinklers was 80:20 but this year this ratio has changed to 95:5," the survey added.

The Assocham surveyed about 1,000 colour manufacturers and shopkeepers in Allahabad, Agra, Hathras, Mathura, Vrindavan, Delhi and the National Capital Region (NCR), Kanpur, Lucknow and Patna between January and February.

The Holi colours and accessories industry is growing at a compounded rate of 20 percent, and the industry is likely to reach Rs.15,000 crore, the Assocham said.