Toy Industry of India

In News

India has recently turned a net exporter of toys, during 2020-21 and 2021-22, ending decades of import dominance. 

Toy Sector in India 

• Historical Linkages: India has a rich history of toys. 
  • The invention of toys in India took place during the Indus Valley Civilization, approximately 8,000 years ago. 
  • The original toys comprised whistle-shaped parrots, toy monkeys with long hands to slide down a rope or stick, and miniature farm carts. 
  • All these toys were made from natural materials such as bamboo sticks, hay, natural clay-like soil, rocks, and fiber cloth. 
• Current Scenario: Today, the advent of progressive technology and mechanism has stimulated companies to produce fresh and inventive toys. 

Potential

• The Indian toy sector is expanding on the shoulder of a growing young population, rising disposable incomes, and a slew of innovations for the junior population base. 
• Toys have been recognised as one of the champion sectors with significant export potential.
• The industry stands on the cusp of significant opportunities in every toy segment such as electronic toys, puzzles, construction and building toys, dolls, ride-ons, sports and outdoor play toys, infant/preschool toys, and activity toys.
  • The Indian toy industry is expanding its global presence, with increased high-value exports to Middle East and African countries.

Achievements

• Between 2018-19 and 2021-22, toy exports increased from $109 million (₹812 crore) to $177 million (₹1,237 crore). 
• Imports declined from $371 million (₹2,593 crores) to $110 million (₹819 crores).
• India turning a net exporter of toys is mainly due to rising protectionism and less, perhaps, on account of expanding domestic capabilities.
• The achievement is widely credited to the ‘Make in India’ initiative launched in 2014, and related policies.

Issues and Challenges

• India’s toy industry is minuscule and during the one-and-half decades between 2000 and 2016, industry output was halved in real terms (net of inflation) with job losses.
• Imports accounted for up to 80% of domestic sales until recently. Between 2000 and 2018-19, imports rose by nearly three times as much as exports.
• India hardly figures in the global toy trade, with its exports at a mere half a percentage point. 
  • Between 2014-19, the Indian toy industry witnessed negative productivity growth. 
• India followed an inward-oriented industrial policy in the Planning era, which sheltered domestic production by providing a “double protection” — by import tariffs and reservation of the product for exclusive production in the small-scale sector — known as the “reservation policy”. 
• Toy manufacturing remained stagnant, archaic, and fragmented, even as imports of modern, safe, and branded toys boomed. 
• The output of the informal or unorganised sector shrank, though it continues to account for the majority of establishments and employment.
• ‘Make in India’ had a negligible effect on strengthening toy production and exports on a sustained basis.

Global Competitors 

• Historically, Asia’s successful industrialising nations promoted toy exports for job creation, starting with Japan about a century ago, China since the 1980s, and currently Vietnam following in their footsteps. 

Steps of India 

• the government has taken several steps to restrict the import of sub-standard and unsafe toys and to promote the domestic toy industry.
  • Under the Prime Minister’s Employment Generation Programme (PMEGP), margin money assistance up to 35% of the project cost is provided for the unit costing up to ₹50 lakh for manufacturing sector and ₹20 lakh in the service sector.
  • Under the Scheme of Funds for Regeneration of Traditional Industries (SFURTI), assistance is provided for creation of Common Facility Centres with latest machines, design centres, skill development, etc.
    • A total of 19 toy clusters have been approved under the scheme benefitting 11,749 artisans with an outlay of ₹55.65 crore.
  • Directorate General of Foreign Trade (DGFT)  mandated sample testing of each consignment and no permission for sale unless the quality testing is successful. 
  • The Government issued Toys (Quality Control) Order through which toys have been brought under compulsory Bureau of Indian Standards (BIS) certification with effect from 01/01/2021. 
    • This QCO is applicable to both domestic manufacturers as well as foreign manufacturers who intend to export their toys to India.
•  The Government of India is planning to provide comprehensive support to pomote ‘Vocal for Local’ in toys  through National Action Plan for Toys (NAPT) by bringing together 20+ Ministries/ Departments. 
• 100% FDI is allowed under the Automatic Route.

Conclusion and Way Forward 

• To sum up, India’s export surplus in toys during 2020-21 and 2021-22, is a welcome change. 
• But Neither the reservation policy during the Planning era nor its abolition after the liberal reforms boosted the industry’s performance. 
• One should perhaps look beyond simplistic binaries — planning versus reforms — and examine the ground reality of industrial locations and clusters to tailor policies and institutions to nurture such industries.
• We need to support and promote the heritage of our traditional toys

Source: TH

Mains Practice Question 

[Q] The Indian toy industry and its craftspeople face survival challenges in today’s market. Discuss