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Author:
Publication: En.rattibha.com
Date: December 30, 2022
URL: https://en.rattibha.com/thread/1608809240965283840?s=03
In 2020, PM Modi was sad that Indian markets are flooded with Chinese toys
So, he set out to destroy China's monopoly in toy manufacturing
The crazy part? India's toy exports have gone from 300 crore to 2600 crore in just 2 years
Here's how he's making India a toy superpower:
The process of making toys is as old as human civilization, and India has a rich legacy in toy-making and storytelling through toys.
But the industry has been largely neglected in the past, which led to its failure in India.
In recent years, however, India’s toy industry has turned out to be a silver lining in the country’s drive to cut import reliance on China.
You see, China is the global toy manufacturing powerhouse.
Its toy industry has been overwhelmingly dominating the toy market for decades
— with its exports exceeding $100 billion in 2021, accounting for 56% of the global toy supply.
On the other hand, India’s global market share is worth $1.5 billion — just 0.5% of the total!
In fact, 80% of India’s toy demand was being fulfilled by imports, and China accounted for 86% of these between 2016-20.
Several drawbacks have kept the Indian toy industry from achieving its true potential of emerging into a global phenomenon, such as lack of
— R&D, design, innovation, financial aid, skilled workers, marketing, etc.
For example, India is completely absent from the electric toy segment which is one of the fastest-growing segments in the toy market, while China absolutely dominates it.
Currently, our toy industry is very disorganized, so a more centralized operation was needed.
The tables turned after a government survey in 2019 found that 67% of toy imports from China were unsafe.
The Chinese toys, which are highly popular among children in India, were coated in unsafe levels of lead, cadmium, and barium.
Following this, several steps have been taken by the government to prevent unsafe toys from entering the country, and to promote the Indian TOYCONOMY.
BASIC CUSTOM DUTY (BCD)
In February 2020, the government hiked customs duty on toys from 20% to 60%.
This will push local manufacturers, who are slow to respond to import threats, to innovate and take more risks to capitalize on global opportunities.
QUALITY CONTROL ORDER
In January 2021, QCO came into force, as per which toys for children under 14 years of age
— must conform to 7 Indian Standards, and
— bear a Standard Mark (ISI) under a license from BIS.
This QCO applies to both domestic manufacturers, as well as foreign manufacturers who intend to export their toys to India.
TOYCATHON
The government launched the Toycathon and Toy Fair in 2021, which provide a chance for the toy manufacturers of India to exhibit their toys and showcase the potential of the Indian toy manufacturing industry.
PM Modi called on people to be vocal for local toys so as to reduce our dependence on imports and pitched for youngsters and start-ups to come forward in improving the country’s Toyconomy.
TOY CLUSTER PROGRAM
The majority of the toy industry in India falls under the MSME sector and is mainly located on the outskirts of Delhi, Maharashtra, and Tamil Nadu.
It is quite scattered, so with the help of this program, the government is planning to streamline the sector by taking it to a specific zone, for example, SEZ (Special Economic Zones).
It will also help the manufacturers easily export overseas.
UPCOMING PLI SCHEME
The government is launching a production-linked incentive (PLI) scheme for both traditional and mechanical toys worth ₹3,500 crores
— to make domestic manufacturing globally competitive and cut down imports from China.
The scheme will last for 5 years, apply to BIS-compliant toys only, and subsidize the sale of toys by local manufacturers.
However, the incentives will be for toy-making and not on toy components, such as electronics, fabric, which aren't available locally. There is no choice.
While it’s far from perfect, it would not only allow manufacturers to increase production capacity and exports, but it would also generate more employment.
As a result of these government interventions, in the past three years,
— toy imports have dropped 70%, from 371 million USD in FY19 to 110 million USD in FY22,
— imports of toys from China have dropped 80% to 59 million USD, and
— toy exports have increased 61.4% to 326 million USD by FY22.
Toys have become more accessible since their prices have been reduced significantly.
The GST rate on toys is between 12-18%, but still, there is space for tax reduction, which will further decrease the price of toys.
Also, most Indian toys are not available on e-commerce websites where the majority of trade takes place today and this results in lower sales.
Both these improvements could further boost sales.
Even toy-making MNCs, such as Hasbro, Lego, Beetle, and even Ikea, are looking at moving their local sourcing from China to India.
Moreover, manufacturers are excited about many government plans that have initiated the quantum leap for the industry.
For example, Funskool India is now exporting to more than 33 countries.
Even up-and-coming toy manufacturers like Micro Plastics and Aequs are doing pretty well.
Still, India has a long way to go in become a major global supplier in the toy industry.
Affordability, quality, and innovation are the key to pushing the growth of the Indian toy industry.
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