In a recent Maan ki Baat address, Prime Minister Narendra Modi pointed to a remarkable transformation in India’s $1 billion toy industry. India’s toy imports, essentially from China, have fallen by 70 per cent in the last three years from $371 million in 2018-19 to $110 million in 2021-22, while exports have risen 61.4 per cent in the same period, from $202 million to $326 million. The industry has turned into a net foreign exchange earner since 2020, after being a net importer to the tune of $150-200 million or more in the three or four years that preceded it. While some fortuitous factors have turned Indian toys into a forex earner, policy moves also seem to have paid off. As for the first, Covid-induced supply disruptions ramped up the cost of imported Chinese toys, rendering Indian toys more competitive in the domestic market. But perhaps the biggest game-changer on the toy import scene was the sharp increase in basic customs duty from 20 per cent to 60 per cent on most imported toys (wheeled toys, dolls, puzzles and recreational models) since February 2020. Quality norms for Indian toys, mandated by BIS and DGFT in the midst of the first Covid wave, might have sent the right signals to UK, Germany and the Netherlands, India’s major markets. While China accounts for over 60 per cent of global toy exports of about $90 billion (according to a September 2021 study of the sector by KPMG and FICCI), melamine contamination of its toys has raised concerns. The challenge before India is to maintain its cost advantage, develop niche products and develop a reputation for quality.

Given India’s export potential, the size of its domestic market (above 300 million children) and the employment intensity of the toys industry, the Centre has done well to give toys an ‘atmanirbhar’ push. According to the KPMG-FICCI study, for every $100 million investment in the sector, 20,000 direct jobs and another 8,000 indirect jobs can be created. The sector is largely unorganised, with 70 per cent existing in the micro space, employing 4-5 lakh artisans. An expansion of the domestic market from over $1 billion now to $2 billion by 2024-25 can be met by 40 per cent domestic output, against 15 per cent till about three years back. Achieving a global export share of 1 per cent (about $1 billion) in a few years does not seem unrealistic. A number of toy clusters, about eight large and over 30 smaller ones for toys and handicrafts, have been approved. Maharashtra, which accounts for over 30 per cent of India’s toy exports, is planning its own clusters. A 400-acre SEZ in Koppal, Karnataka, is expected to generate 40,000 jobs in five years.

Industry allegations of under-invoiced, and cheap Chinese toys continuing to enter the market must be looked into. But the key issue is for India to carve its own niche. While experts have identified a market opportunity in plastic toys, India should develop its ethnic products. While wheeled toys account for 58 per cent of the world trade and video games and other electronic toys another 23 per cent, there is space for India to offer a unique blend of traditional and modern designs. Design and educational experts should team up with MSME clusters to create toys out of items of common use, be it coir or discarded material. A space for ethnic, elegant and eco-friendly toys is waiting to be tapped. Policies that push homogeneity over diversity will not serve India’s cause.