Economic Highlights

New Delhi, 3 July 2023

India’s Toy Industry

TO REPLACE CHINA BY 2028

By Shivaji Sarkar 

India is poised to replace Chinese toys with indigenous manufacturing touching $1.5 billion. It is likely to double to $3.3 billion by 2028, according to International Market Analysis Research and Consulting Group (IMARC Group). 

India’s toy imports, according to official figures, have declined by more than 70 per cent in the past 3.5 year, while exports have jumped by 61.3 per cent. It is expected to grow at 12 percent compound annual growth rate (CAGR). The world’s leading toymaker Mattel recalled over 21 million Chinese-made toys worldwide in 2007 due to excessive levels of lead paint and other unsafe components. 

India first banned toy imports from China mainly for its toxicity on 23 January 2009 but again eased it on 6 March 2009. The Narendra Modi government has put restrictions again on September 1, 2017.Despite all this as per WTO norms a complete ban on toy imports is unlikely. 

A new government initiative promises to help Indian toymakers scale up production capacity to compete internationally, further shrinking China’s share in the domestic market. The government is considering a special scheme for the toy industry, according to Ajay Aggarwal, President of the Toy Association of India. It is likely to be a production-linked incentive, which will spur the activities of the toy industry.  

India is home to 25 per cent of world’s children aged between 0 and 12 years. Domestic demand is huge. It also has a rich history and culture when it comes to toy making. India’s toy industry has been a rare bright spot in the country’s drive to cut import reliance on China in recent years. 

Various policies to reduce dependence on Chinese goods and boost local manufacturing have been initiated, while taking advantage of western efforts to diversify from the world’s No 2 economy, says the International Labour Organisation study. 

India’s share in the global toy market, estimated at $90 billion, is 0.5 per cent ($500 million). The toy manufacturers are mostly located in NCR, Maharashtra, Karnataka, Tamil Nadu and clusters in some other States. Chitrakoot in Uttar Pradesh, Kondapalli in Andhra Pradesh, Tanjore dolls, Ghurni clay dolls, Rajasthani puppets and Chennapatna on the Bengaluru-Mysuru highway have age old tradition of toy making but are unable to keep up with modern scale and trends. 

The traditional craft is protected as a geographical indication (GI) under the World Trade Organisation. These are in demand in the West as exquisite pieces of art.India’s domestic toy industry comprises 4,000 micro, small and medium enterprises (MSMEs) and is primarily in the unorganised sector. 

The increasing population catalyses the demand for toys. In addition, inflating income levels and the rising awareness among individuals about the benefits of toys in improving the cognitive capabilities of children are positively influencing the market in the country. Apart from this, a shifting preference from conventional toys towards modern and hi-tech electronic toys is strengthening the market growth. In line with this, the escalating demand for sensory toys for kids with special needs is driving the market in India, the ILO notes. 

Advanced technology and machinery encourage manufacturers to produce innovative toys and boosting market outlook. The rising sales of smartphones, laptops, and personal computers (PCs), along with the increasing influence of social media, are propelling market growth. 

The Amazon sold $6292 million worth toys, Walmart $4645 million and Target $1621 million through e-commerce. India’s import of toys in financial year 2018-2019 stood at $1.4 billion (Rs10,000 crore). Almost 85 percent of the toys till 2020 sold in India are imported, with China being the top source, followed by Sri Lanka, Malaysia, Germany, Hong Kong and the US. 

A large variety of toys are available within the Indian market, they can be broadly classified into two very distinct categories on the basis of their application & purpose -- educational and recreational. Amongst these two categories, under educational toys various toys and games made out of plastics and cardboard materials are prominent, while recreational toys, including electronic toys -- remote controls, video games, battery operated toys, cars, plastic toys, dolls, soft toys and mechanical pull back toys are not popular amongst modern parents. However, out of all of these toys, the electronic toys & games as well as the battery-operated toys are being manufactured less in India. 

The markets still sell Chinese products as these are considered to behold the buyer. The Indian toys, despite being less expensive, are supposedly of better quality have yet to carve out a niche in the market. There is a perception that the imported are technologically better. Manufacturers say that at initial stages the reactions are normal but as the indigenous products proliferate the perception would change. 

Manufacturers find that while they have started mainly plastic toys as it is easier, they face different kinds of problems. It is just not the kind of metals and plastics, but many toys need different kinds of textiles and other accessories. The ancillaries are yet to come up. Some require particular kind of durable, light and special fabric. That too is not locally available. China has also advanced low-cost electronics industry. 

However, they are expecting more government support for banning imports to sustain production.  A KPMG-FICCI report is hopeful that the country’s market size would be doubling to $2 billion shortly. Electronic toys comprise about ten percent of the toy segment, it is hoped that even without it the rest of the segment would grow and gradually critical areas would also be covered. 

The Ministry of Commerce and Industry is trying to understand the dynamics and shortcomings. It is also looking at the experience of other countries and is working with the Toy Association of India. 

Overall, a good import substitution move has been made and the government expects the sector to take a leap by 2028. The Ministry of Commerce is of the opinion that in the next few years the Indian toy industry would compete with China and have a niche in the world market.----INFA 

(Copyright, India News & Feature Alliance)