1: The Transformation of Indian Toy Industry

- The toy industry in India displayed an extraordinary growth trajectory, with exports rising by 239% and imports falling by 52% between 2014-15 and 2022-23.

- Various policy changes from the "permit licence Raj" era to the 'Make in India' initiative have played a significant role in the industry’s evolution.

- The recent success of the toy industry is largely credited to 'Make in India' initiatives.

- The negative trade balance of Rs.1,500 crore in 2014-15 turned positive from 2020-21 resulting in India's emergence as a net exporter of toys.

- Despite high import duties, there is a decline in net exports from Rs.1,614 crore to Rs.1,319 crore between 2022-23, proportional to a more significant decline in toys (31%) compared to all toys (18%).

2: Factors for Becoming a Net Exporter

- Increase in customs duty from 20% to 60% and further to 70% in 2023 along with Non-tariff barriers, such as Quality Control Order (QCO) and mandatory sample testing, have deterred toy imports.

- Coronavirus-led disruption in global supply chains in 2020-21 impacted imports. Restoration of global supply in 2022-23 reduced net exports, indicating a correlation between supply chain disruptions and India's net export performance.

3: Challenges Faced by Toy Industry

- Domestic productive capabilities remain limited along with declining labour productivity, raising concerns about efficiency and competitiveness.

- Dependence on foreign nations for sourcing raw materials, outdated technology, high GST rates, competition from cheap alternatives, and an unorganised and fragmented market structure pose significant challenges.

4: National Action Plan for Toys (NAPT)

- Launched by the Indian Government in 2020, this comprehensive plan aims to globally promote the Indian toy industry including traditional handicrafts and handmade toys.

- The plan includes 21 action points, decided by the DPIIT, addressing various dimensions such as design, quality control, e-commerce, skill development, and promotion of indigenous toy clusters.

5: The Way Forward

- The effectiveness of protectionist measures needs to be evaluated along with fostering a system that maintains a balance between protectionism and competitiveness.

- Encouraging investment in technology, research and development, and skill enhancement is of utmost importance.

- Rigorous enforcement of quality control measures such as QCO can help meet international standards.

- Introducing environment-friendly practices and developing localised infrastructure to support the toy manufacturing clusters can maximise the industry's potential.

The recent surge in the Indian toy industry has presented as a remarkable growth story. However, to continue the growth trajectory, encouraging investment, improving quality standards, and creating a sustainable environment are essential. With the right measures, India has the potential to become a global toy manufacturing hub.