Booming Indian Toy Sector
About:
- An estimated $5 billion USD is the value of the toy sector in India.
- The value of the toy industry worldwide is estimated to be USD 120 billion, or 1% of the total market.
- The NCR, Maharashtra, Karnataka, Tamil Nadu, and other central Indian states are home to the majority of India’s toy producers.
- The industry is fragmented, with 4,000 toy industry units from MSMEs contributing to the 90% of the market that lacks organisation.
- Compared to the global average of 5%, the domestic toy demand is expected to expand at a rate of 10-15%.
Export promotion for toys:
- Made in India: According to official news releases, the accomplishment is a result of the 2014-launched “Make in India” campaign and associated policies.
- Mann ki Baat: The Prime Minister discussed encouraging the production of toys in 2020.
- Research conducted by the Department for Promotion of Industry and Internal Trade (DPIIT)-sponsored Indian Institute of Management Lucknow (IIM-L)
- It attributes the export success to a number of marketing initiatives run under the “Made in India” campaign.
- After a 23-year lapse, the trade balance turned positive in 2020–21 from a negative ₹1,500 crore in 2014–15.
How did India start exporting goods?
- Protectionism: A hike in import taxes may cause the market for toys to decline.
- Non-tariff barriers have the potential to decrease demand by raising prices, reducing supply.
- An increase in investment might increase worker productivity and capacity, which would increase competitiveness and exports.
What is demonstrated by the evidence?
- Customs duty on toys (HS code 9503) increased thrice in 2020, from 20% to 60%.
- Imports have been restricted since 2021 by the imposition of non-tariff barriers (NBTs), namely quality control orders (QCOs) and required sample testing of every import consignment.
- 2020–21 saw a decline in imports and a rise in net exports.
- During the COVID-19 pandemic, imports suffered because to worldwide supply chain disruptions.
- In 2022–2023, net exports (for all toys) decreased to ₹1,319 crore from ₹1,614 crore the year before as exports dropped and imports surged as the global supply chain was reestablished.
- Despite the high import duty, the decline in net exports is more severe (31%) for toys with HS code 9503 than it is for all other toys (18%).
- The government also increased the baseline customs charge from 60% to 70% in an effort to curb the recent surge in imports.
Every Yearly Survey of Industries (ASI): 2014–15–2019–20:
- (Combined numbers for the organised and unorganised sectors) In 2015–16:
- Of the total number of factories and firms, 1% were in the organised sector.
- 20% of workers were employed.
- 63 percent of fixed capital was used.
- 77% of the output’s value was created (“India’s Toy Industry: Production and Trade since 2000”).
- The ASI data from 2014–15 indicates that the gross value of output and fixed capital per worker have not increased steadily.
- From ₹7.5 lakh per worker in 2014–15 to ₹5 lakh in 2019–20, labour productivity decreased steadily (more current data unavailable).
- Export increases in the years prior to and following 2014–15 are same.
- Risen protectionism is the reason behind India’s toy trade turnaround from 2020–21.
The Way Ahead:
- Protectionism must be supplemented with investment policies and the creation of regional public infrastructure tailored to a particular industry or cluster in order to create a positive feedback loop that increases domestic capacity to compete globally.
- From 2020 to 2021, the toy business has become a net exporter thanks to “Make in India” rules, according to a study that was officially sponsored. Publicly available trade and industry data refute this claim.
- It is now feasible due to rising tariffs and non-tariff barriers.
- The IIM-L study supports its claims with a variety of evidence.
- In light of the conflicting conclusions, the study ought to be made available to the public for thoughtful policy analysis and discussion.
