TOY INDUSTRY IN INDIA – ECONOMY
News:
Goyal: 33% toys passed quality test in 2019, now 85% do
What's in the news?
● Consumer
Affairs Minister Piyush Goyal said that India has seen a big change in the
quality of toys as now almost 85-90% toys pass the quality tests against 33% in
2019.
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 is 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.
● 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).
What are the factors contributing to the growth of the
toy industry in India?
1. 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.
2. Rising disposable income:
● India
has experienced strong GDP growth rates for the last several years, and the middle-class population has experienced
strong growth.
3. Rise in online purchases:
● Online
sales channels have witnessed a boom in India with the evolution of smartphones
and other digital media.
4. 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.
5. Disincentivizing 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
1. 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.
2. Cultural preservation:
● Toys
can be an important way to preserve cultural traditions and heritage.
3. Women empowerment:
● India’s
toy industry employs 3 million workers, of which 70% are women. This indicates the significant role of women in the
industry.
4. Socio-economic development:
● Employment
in the toy manufacturing sector offers avenues for socio-economic empowerment, financial
security, and skill development for women.
5. Reduction in imports:
● The
toy industry has the potential to reduce imports and fulfill domestic demand,
contributing to India’s economic growth.
6. Local branding:
● The
promotion of indigenous toy manufacturing can preserve local cultural forms and
traditions.
7. Allied industries:
● The
industry can contribute to the growth of related sectors such as plastics, textiles, and packaging.
8. 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.
Challenges to Toy Industry in India:
1. Unorganized and fragmented:
● It
continues to be significantly fragmented, with 90 percent of the market being unorganized.
2. 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.
3. Less competitive:
● The
retail value of the Indian toy market is INR 16, 000 crores of which close to
three-fourths are Chinese imports.
4. Imported 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.
5. Cheap Chinese alternatives:
● Consumers
are accustomed to cheap Chinese toys.
Government Initiatives:
1. Toycathon:
● In
January 2021, it launched ‘Toycathon’, a hackathon to develop toys and games
based on Indian culture and ethos.
2. 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.
3. Formal recognition:
● Toy
manufacturing clusters across the country have come to be formally recognized
and supported by the government.
4. Cluster-based production:
● State
governments 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.
5. Tax incentives:
● Basic
Custom Duty (BCD) on Toys-HS Code-9503 has been increased from 20% to 60% in
February 2020.
6. GI tags:
● The
Toys bearing GI tags such as Channapatna, Varanasi, etc. are also being
exported.
WAY FORWARD:
1. Develop an India-centric toy line:
● The
government can encourage the development of a distinct Indian toy line that
reflects Indian culture and values.
2. Dedicated legislation:
● The
government can provide incentives to encourage local manufacturing of toys and
promote the use of locally-sourced raw materials.
3. Promote skill development and training:
● The
government can focus on providing skill development and training programs to
support the growth of the toy industry.
4. 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.
5. 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.
6. Strengthen quality standards and certification:
● The
government can work with industry stakeholders to strengthen quality standards
and certification for toys.