The Hindu Editorial Analysis- 31st May 2023 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

Unboxing the ‘export turnaround’ in India’s toy story

Why in News?

India has turned into a net toy exporter lately—claimed as evidence of the success of “Make in India” and related promotional policies.

• Between 2018–19 and 2021–22, toy exports reportedly rose from $109 million (`812 crore) to $177 million (`1,237 crore); the imports declined from $371 million (`2,593 crore) to $110 million (`819 crore).
• The call to raise toy production and exports is in line with Make in India—the government’s flagship initiative launched in October 2014.

Toy Industry in India

• Presently, the Indian toy industry is only 5% of the global industry size indicating a large potential growth opportunity.
• The domestic toy demand forecasted to grow at 10-15% against the global average of 5%.
• The report ‘State of play: India’s toy story- Unboxing fun and beyond’ said India could also target a 2% share of global exports by 2025.
• There is high growth potential for India in exports of plastic toys and board games in the US, EU, and the Middle East among other markets.

Factors driving growth of India’s Toy Industry

• Huge consumer base: India’s population stands at around 1.4 billion, with approximately 26.62% of the population falling into the 0-14 age category.
• Rising disposable income: India has experienced strong GDP growth rates for the last several years, and the middle-class population has experienced strong growth.
• Rise in online purchases: Online sales channels have witnessed a boom in India with the evolution of smartphones and other digital media.
• Shifting preferences: According to the Toy Association report in 2018, parents believe in STEM-focussed toys as their primary way to encourage science and math development in young children.
• Disincentivising imported toys: The Indian government has increased the basic customs duty on toys from 20% to 60%, reduced availability of imported toys and enhanced demand for the domestic toy industry.

Significance of Toy Industries

• Child development: Toys are not just a source of entertainment but also play a critical role in the cognitive, emotional, and physical development of children.
• Cultural preservation: Toys can be an important way to preserve cultural traditions and heritage.
• Women centric: India’s toy industry employs 3 million workers, of which 70% are women. This indicates the significant role of women in the industry.
• Lesser skill intensive: Employment in the toy manufacturing sector offers avenues for socio-economic empowerment, financial security, and skill development for women.
• Promotes gender equality at workplace: Toy manufacturing promotes equal task division and partnerships between men and women artisans, promoting gender equality in the industry.
• Import potential: The toy industry has the potential to reduce imports and fulfill domestic demand, contributing to India’s economic growth.
• Local branding: The promotion of indigenous toy manufacturing can preserve local cultural forms and traditions.
• Allied industries: The industry can contribute to the growth of related sectors such as plastics, textiles, and packaging.
• Environmental impact: The industry can also provide opportunities for social and environmental impact, such as creating sustainable and eco-friendly toys that contribute to the overall sustainability agenda.

Toy Industries & Women Empowerment

• Employment in the toy manufacturing sector offers its female-majority workforce avenues for socio-economic empowerment, financial security, and skill development.
• It also offers opportunities for women to act as agents of change by preserving local toy forms, intrinsic to their regions.
• Toy manufacturing also creates possibilities for men and women artisans to work together, thereby promoting equal task division and partnerships.
• For instance, in Tamil Nadu, the manufacturing processes of ‘Vilachary’ clay toys are divided between men and women.

Various Challenges to this sector

• Unorganized and fragmented: It continues to be significantly fragmented, with 90 per cent of the market being unorganized.
• Small scale: 75 percent of domestic manufacturing originates in micro-industries, while 22 percent comes from MSMEs. Less than 3 percent of the domestic toy manufacturing processes come from large units.
• Less competitive: The retail value of the Indian toy market is INR 16, 000 crores of which close to three-fourths are Chinese imports.
• Foreign dependence for sourcing raw materials: Indian manufacturers specialize in board games, soft and plastic toys, and puzzles, etc. Companies have to import materials from South Korea and Japan to manufacture these toys.
• Cheap Chinese alternatives: Consumers are habituated for long to cheap Chinese toys.

Govt initiatives

• Toycathon: In January 2021, it launched ‘Toycathon’, a hackathon to develop toys and games based on Indian culture and ethos.
• Atmanirbhar Bharat: To promote the indigenous toy manufacturing industry, this multi-Ministerial effort sought to create an ‘Aatmanirbhar’ eco-system for local manufacturers by exploring their untapped potential.
• Formal recognition in years: Toy manufacturing clusters across the country have come to be formally recognized and supported by the govt.
• Cluster-based production: State govt. are in the process of allocating spaces for toy parks. For instance, Koppal District in Karnataka has recently been recognized as the country’s first toy manufacturing cluster.
• Tax incentives: Basic Custom Duty (BCD) on Toys-HS Code-9503 has been increased from 20% to 60% in February 2020.
• GI tags: The Toys bearing GI tags such as Chennapatna, Varanasi, etc. are also being exported. 

Other policy initiatives

• Start-ups push: The government has called upon start-up entrepreneurs to explore the toy sector.
• Import dis-incentivization: The government has increased basic customs duty from 20% to 60%. It is likely to result in toy importing brands to explore manufacturing in India.
• Quality assurance: The government has made toy quality certification mandatory to revive the indigenous industry.
• Incubation centres: The government has chalked out a plan to promote traditional toys manufactured in the country by creating Toy Labs. A plan to establish networks of toy labs such as Atal Tinkering Labs is also in loop.
• Make in India: The government is gradually introducing a new norm in the minds of consumers to purchase safe and good-quality ‘Made in India’ toys as against cheap and poor-quality imported toys.

Way forward

• Develop an India-centric toy line: The government can encourage the development of a distinct Indian toy line that reflects Indian culture and values.
• Dedicated legislation: The government can provide incentives to encourage local manufacturing of toys and promote the use of locally-sourced raw materials.
• Promote skill development and training: The government can focus on providing skill development and training programs to support the growth of the toy industry.
• Enhance export competitiveness: The government can support the growth of toy exports by promoting and facilitating the development of export infrastructure, such as logistics and distribution networks.
• Foster collaboration between industry and academia: The government can encourage collaboration between the toy industry and academic institutions to promote research and development in the industry.
• Strengthen quality standards and certification: The government can work with industry stakeholders to strengthen quality standards and certification for toys.

Conclusion

• In order to take the benefits to these segments, we need to be vocal for local toys.
• There is a need for new ideas to be incubated, new start-ups promoted, taking new technology to traditional toy makers and creating new market demand.
• The 75th anniversary of India’s Independence is a huge opportunity for the innovators and creators of the toy industry.