Context:
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.
Relevance:
GS III: Indian Economy
Dimensions of the Article:
- Evolution and Status of the Toy Industry in India
- Government Initiatives to Boost the Toy Sector in India
Evolution and Status of the Toy Industry in India
Historical Context:
- Successful Asian nations like Japan, China, and Vietnam leveraged toy exports for job creation during their industrialization phases.
- However, India’s toy manufacturing remained stagnant, archaic, and fragmented due to inward-oriented industrial policies during the Planning-era.
Impact of LPG Reforms:
- The introduction of Liberalization, Privatization, and Globalization (LPG) reforms in the 1990s led to the entry of new enterprises into the organized toy manufacturing sector, boosting productivity.
Post-2007 Challenges:
- Despite early positive indicators, the industry faced challenges post-2007, with de-reservation struggling to sustain output, investment, and productivity growth.
Current Landscape (2015-16):
- The industry comprised around 15,000 enterprises in both organized and unorganized sectors, generating ₹1,688 crore worth of toys and employing 35,000 workers.
Decline and Imports Surge (2000-2016):
- Industry output was halved in real terms between 2000 and 2016, leading to job losses and negative productivity growth.
- Imports surged, accounting for up to 80% of domestic sales, while India’s presence in global toy trade remained minimal.
Government Aspirations (2020):
- In 2020, the Indian Prime Minister expressed the vision of establishing India as a global toy manufacturing hub.
Recent Trends (2018-19 to 2021-22):
- Toy exports increased from ₹812 crore to ₹1,237 crore, while imports declined from ₹2,593 crore to ₹819 crore.
Challenges:
- The industry faces limitations in sustaining net exports due to minimal investments in increasing output and exports.
Government Initiatives to Boost the Toy Sector in India
Make in India Initiative (2014):
- Launched in 2014, the Make in India initiative aimed to promote indigenous manufacturing across sectors, including toys.
National Action Plan for Toys (NAPT):
- Implemented to encourage toy designing, utilize toys for educational purposes, ensure toy quality, and promote indigenous toy clusters.
Custom Duty Hike (2020):
- The basic custom duty on toys was tripled, increasing from 20% to 60% in 2020 to boost domestic manufacturing.
Quality Control Measures:
- The Directorate General of Foreign Trade (DGFT) mandated sample testing for each toy import consignment to prevent sub-standard toy imports.
- Non-tariff barriers, including the issuance of a Quality Control Order (QCO) for Toys in 2020, were imposed.
Support from Ministry of MSME:
- The Ministry of Micro, Small, and Medium Enterprises (MSME) is supporting 19 Toy clusters under the Scheme of Funds for the Regeneration of Traditional Industries (SFURTI).
Support from Ministry of Textiles:
- The Ministry of Textiles is providing designing and tooling support to 13 Toy clusters.
Promotional Initiatives:
- Various promotional initiatives, such as the Indian Toy Fair 2021 and Toycathon, have been undertaken to promote indigenous toys and foster innovation.
Highlights from the Success Story Case Study:
Conducted by IIM Lucknow:
- The case study on the “Success Story of Made in India Toys” was conducted by IIM Lucknow at the request of the Department for Promotion of Industry and Internal Trade (DPIIT).
Impact of Government Efforts (2014-2020):
- In six years, the number of manufacturing units doubled, showcasing the success of government initiatives.
- Dependence on imported inputs decreased from 33% to 12%.
- Gross sales value increased by a Compound Annual Growth Rate (CAGR) of 10%.
- There was an overall rise in labor productivity.
Global Integration:
- India is emerging as a leading exporting nation in the global toy value chain.
- The country benefits from zero-duty market access for domestically manufactured toys in countries like the UAE and Australia.
