I n August 2020, Prime Minister Modi in his nationwide address in the Mann ki Baat programme articulated a vision for India’s toy industry and a “sankalp” (resolve) to make India a toy manufacturing hub for the entire world. Post this, the government rolled out a number of initiatives to rejuvenate the toy industry, which was long overcrowded by cheaper imports, majorly from China. In 2019-20, 84 per cent of India’s toy imports were from China. This decreased drastically from $235 million in 2019-20 to $39 million in 2022- 23.

One of the first initiatives the government undertook was the launch of the National Action Plan for Toys in September 2020. The plan involved sixteen ministries and aimed at promoting trade and investment in the toy industry, encouraging the design and manufacturing of indigenous toys, and positioning toys as a crucial learning resource. The government has also taken protectionist measures to safeguard the domestic industry. These includea) the imposition of higher import duties on toys (earlier the Basic customs duty on toy imports was 20 per cent, now it is 70 per cent), b) sample testing of each import consignment, mandated by Directorate General of Foreign Trade and the introduction of the Toy (Quality Control) Order in January 2021 that requires children’s toys to adhere to seven Indian Standards for the safety of toys and to have the “ISI” Mark. Additionally, India has secured zero-duty market access for its toy exports under Free Trade Agreements (like the India-UAE CEPA and India-Australia ECTA).

This has helped export of toys. The multiple initiatives undertaken by the government have provided solid support to the domestic toy industry. In 2020, the Indian toy industry was valued at around $1.5 billion. It is expected to grow at a compound annual growth rate of 12.25 per cent to reach $3 billion by 2028. Toy exports have increased by 61 per cent between 2020 and 2023. What’s interesting is the yet-to-beexplored synergy between the National Action Plan for Toys and the National Education Policy (NEP) 2020. The National Action Plan for Toys emphasizes toys as learning resources. The NEP also recognizes the importance of toys in early childhood education, and advocates for toy-based pedagogy. This has opened up new avenues for the development of educational toys. Implementing a domestic and regional sourcing strategy in Indian schools could significantly boost the toy industry.

The time is also ripe for promotion of traditional toys and handicrafts. These toys are safer and more sustainable than their plastic and metal counterparts, and also promote India’s diverse regional traditions and artistry. Leveraging this cultural legacy will preserve these art forms and this category of toys will stand out in the global market, giving Indian toy exports a unique competitive advantage. While the Production-Linked Incentive (PLI) scheme has not yet been extended to the toy industry, its success in other sectors, such as electronics, has helped increase manufacturing and exports. For example, in mobile phones exports – PLI beneficiaries contributed to 82 per cent of mobile phones exports during 2022- 23. The PLI scheme, designed to boost domestic manufacturing by offering financial incentives for incremental production, could attract significant foreign investment and enhance India’s competitiveness in the global toy market.

According to reports, a PLI for manufacturing of toys was expected in this year’s budget but is yet to be cleared by the cabinet. While the toy industry is headed in the right direction, some issues still need the government’s attention. The sector remains largely unorganized, with 90 per cent of the market dominated by small-scale and cottage industries. These small manufacturers lack access to advanced technology and capital and find it difficult to compete with well-established global players, particularly from China. Small manufacturers also find it expensive to comply with safety and quality standards. Going forward, to achieve the goal of making India a global toy manufacturing and export hub, the government should sustain the momentum on its current initiatives and focus particularly on three others. Firstly, a focus on research and development for better innovation in design and cheaper costs of production.

Second, the Production Linked Incentive scheme has shown good results in electronics and other sectors in a short span of time; the government should consider extending the scheme to the toy sector to attract more investment and incentivise large-scale manufacturing. Finally, it should focus on promoting our cultural heritage while encouraging small scale manufacturers and the handicrafts industry through capacity building and better opportunities for market linkages India’s toy industry is on a promising trajectory, and with sustained efforts, the country is poised to solidify its position as a global leader. The road ahead may be challenging, but the potential rewards are immense – not just for the economy, but for preserving and promoting India’s rich cultural heritage on the world stage. (The writers are public policy consultants and former LAMP

(Legislative Assistance to Members of Parliament)