Toy Industry in India: Registers 239% Increase in Toy Exports in 2022-2023

What’s in Today’s Article?

• Why in News?
• Toy Industry in India
• Steps Taken by the Government of India to Promote Toy Sector
• Highlights of the Case Study on “Success Story of Made in India Toys”
• Way Ahead to Promote Indian Toy Sector

Why in News?

• According to a case study on “Success Story of Made in India Toys” released by the DPIIT, the Indian Toy industry witnessed a rise of 239% in exports (and decline in imports by 52%) in 2022-23 as compared to 2014-15.

Toy Industry in India

• Evolution:
  • Asia’s successful industrialising nations [Japan (a century ago), China (since 1980s) and currently Vietnam] promoted toy exports for job creation.
  • However, toy manufacturing remained stagnant, archaic and fragmented in India, which followed an inward-oriented industrial policy (import tariffs and reservation policy) in the Planning-era, affecting domestic production.
  • With the introduction of LPG reforms in India in the 1990s, new enterprises entered the organised toy manufacturing sector, and productivity growth increased.
  • Despite early encouraging signs, industry de-reservation was unable to sustain output, investment and productivity development beyond 2007-08.
• Data related to growth:
  • In 2015-16, the industry had about 15,000 enterprises in both organised and unorganised sectors, producing toys worth ₹1,688 crore and employing 35,000 workers.
  • Between 2000 and 2016, industry output was halved in real terms with job losses and the industry witnessed negative productivity growth between 2014-19.
    • As a result, imports rose by nearly 3 times as much as exports and accounted for up to 80% of domestic sales.
    • India hardly figures in the global toy trade, with its exports at a mere half-a-percentage point.
  • The Indian PM (during his Mann ki Baat address in August 2020) expressed his desire to establish India as a global Toy manufacturing hub.
  • Between 2018-19 and 2021-22, toy exports increased from ₹812 crore to ₹1,237 crore and imports declined from ₹2,593 crore to ₹819 crore.
• Challenges: The industry's ability to sustain net exports is limited, as it has made minimal investments to increase output and exports.

Steps Taken by the Government of India to Promote Toy Sector

• Make in India initiative (2014).
• National Action Plan for Toys (NAPT) to promote the designing of toys, using toys as a learning resource, monitoring the quality of toys and promoting indigenous toy clusters.
• Basic custom duty on toys (tripled from 20% to 60% in 2020).
• The Directorate General of Foreign Trade (DGFT) has mandated sample testing of each import consignment to curb the import of sub-standards toys.
• Numerous non-tariff barriers [a Quality Control Order (QCO) for Toys was issued in 2020] were imposed.
• The Ministry of MSME is supporting 19 Toy clusters under the Scheme of Funds for the Regeneration of Traditional Industries (SFURTI).
• The Ministry of Textiles is providing designing and tooling support to 13 Toy clusters.
• Several promotional initiatives have also been undertaken to promote indigenous toys and encourage innovation, including the Indian Toy Fair 2021, Toycathon, etc.

Highlights of the Case Study on “Success Story of Made in India Toys”

• The case study has been conducted by the Indian Institute of Management (IIM) Lucknow at the behest of Department for Promotion of Industry and Internal Trade (DPIIT).
• The Central Government has enabled a more conducive manufacturing ecosystem for the Indian Toy industry.
• In a span of 6 years (2014 to 2020), these dedicated efforts have led to the doubling of the number of manufacturing units.
• It helped in the reduction in dependence on imported inputs from 33 to 12% and increase in gross sales value by a CAGR of 10%, and overall rise in labour productivity.
• India is also emerging as a top exporting nation due to the country's integration into the global toy value chain, along with zero-duty market access for domestically manufactured toys in countries including UAE and Australia.

Way Ahead to Promote Indian Toy Sector

• In order to position India as a viable alternative to current toy hubs of the world, i.e., China and Vietnam, consistent collaborative efforts of the Toy industry and the Government are essential for
  • Advancements in technology,
  • Embracing e-commerce,
  • Encouraging partnerships and exports,
  • Investing in brand-building,
  • Engaging with educators and parents to communicate with children,
  • Valuing cultural diversity and collaborating with regional artisans, etc.

Q1) What is the Scheme of Funds for the Regeneration of Traditional Industries (SFURTI)?

SFURTI is an initiative by the Ministry of MSME to organise the traditional industries and artisans into clusters to make them competitive and provide support for their long-term sustainability.

Q2) What is the Department for Promotion of Industry and Internal Trade (DPIIT)?

The DPIIT is a central government department under the Ministry of Commerce and Industry in India. It is responsible for formulation and implementation of promotional and developmental measures for growth of the industrial sector.

Source: Toy Industry registers 239 percent increase in toy exports in 2022-2023 | PIB