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India’s Toy Story: Can PM Modi’s call for 'Vocal about Local' be a gamechanger?

Steena Joy
·Contributor
·5-min read

In line with PM Narendra Modi’s vision of Aatmanirbhar Bharat, India’s first Toy Fair will open today virtually, from February 27 to March 2, to boost manufacturing and increase global market share of local toys. The four-day fair aims to bring all stakeholders in one place to create sustainable linkages.

Modi believes India can become self reliant in toys. In a recent televised interaction he said, “The country has the ability to become a toy hub for the entire world. For the same, discussions have been held with various industry representatives to increase their production of indigenous toys.”

He urged young entrepreneurs to 'team up for toys' as part of his government's 'vocal for local' initiative. He pointed out that most of the games kids play today are influenced by the West. “We should have India-centric games. We can be 'Atmanirbhar' in this regard," he quoted.

According to Invest India, the Indian Toys industry is estimated to be US$ 1.5 bn, making up a meagre 0.5% of the global market share. The toy manufacturers in India are mostly located in NCR near Delhi, Maharashtra, Karnataka, Tamil Nadu and clusters across central Indian states. Maharashtra currently represents the largest market. The sector is fragmented with 90% of the market being unorganised and about 4,000 toy industry units in the Micro, Small and Medium Enterprises (MSME) sector.

The toy manufacturers in India are mostly located in NCR near Delhi, Maharashtra, Karnataka, Tamil Nadu and clusters across central Indian states. Maharashtra currently represents the largest market
The toy manufacturers in India are mostly located in NCR near Delhi, Maharashtra, Karnataka, Tamil Nadu and clusters across central Indian states. Maharashtra currently represents the largest market

The toys industry in India has the potential to grow to US$ 2 to 3 bn by 2024. The domestic toy demand is forecasted to grow at 10-15% against the global average of 5%, indicating a large potential growth opportunity.

Major trends driving demand:

  • An increase in per capita income to 2027

  • An increase in the proportion of affluent and elite consumers in Tier 2 & Tier 3 cities by 2025

  • 80% of the population will belong to Gen ‘I’ by 2027

  • E-commerce/online sales channels have grown to be one of the fastest growing distribution channels for toys in India, especially during Covid-19.

Local toys, Global playground

For a nation that has so much diversity, young population, heritage, tradition, to have such a small share in the toy market is indeed unfortunate. Modi’s government seeks to correct this with the Toy Fair initiative.

First off the block is Karnataka which is already creating India's first toy cluster in the district of Koppal, developed in partnership with Aequs Infra. Koppal Toy Cluster has been designed to house an entire Toy Manufacturing Ecosystem to support toy manufacturers, suppliers, and vendors across the toy value chain. The Toy cluster also brings together in-campus business support services, including social infrastructure and residential accommodation, to support the workforce.

The toys industry in India has the potential to grow to US$2 to 3 bn by 2024. The domestic toy demand is forecasted to grow at 10-15% against the global average of 5%, indicating a large potential growth opportunity
The toys industry in India has the potential to grow to US$2 to 3 bn by 2024. The domestic toy demand is forecasted to grow at 10-15% against the global average of 5%, indicating a large potential growth opportunity

A strategic location with its proximity to and connectivity with Hubballi and Bengaluru, conducive business environment and state-of-the-art infrastructure makes Koppal an ideal business hub for the toy industry.

The cluster will provide state-of-the-art industrial infrastructure with power, water, internal roads, and waste disposal facilities and common facilities like customs, security, and a Centre of Excellence. Spread over 400 acres, the cluster will have plug-and-play industrial buildings along with the option to customise the industrial facilities. It will also include an SEZ to serve export markets and domestic tariff area (DTA) for the domestic market. It has the potential to create 30,000 direct jobs in five years and attract over Rs 5,000 crore in investments.

The existence of toys in India dates back to the Indus Valley Civilisation around five thousand years ago. The earliest toys included whistles shaped like birds, toy monkeys which could slide down a string and small carts
The existence of toys in India dates back to the Indus Valley Civilisation around five thousand years ago. The earliest toys included whistles shaped like birds, toy monkeys which could slide down a string and small carts

According to IMARC, a leading market research company, the existence of toys in India dates back to the Indus Valley Civilisation around five thousand years ago. The earliest toys included whistles shaped like birds, toy monkeys which could slide down a string and small carts which were made from materials found in nature such as sticks, clay and rocks. In recent years, the advent of advanced technology and machinery has encouraged manufacturers to produce modern and innovative toys. The Indian toys market reached a value of US$ 1.23 billion in 2020. Looking forward, IMARC expects the Indian toys market to grow at a CAGR of 12.2% during 2021-2026.

The Covid-19 lockdowns helped increase demand for toys especially those that can be played indoors. The pandemic may have also impacted imports. India imported toys worth US$ 1.4 billion (around Rs 10,000 crore) in 2018-19. Almost 85% of the toys sold in India are imported, with China being the top source, followed by Sri Lanka, Malaysia, Germany, Hong Kong and the US.

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Local support

Two major industry bodies support the toys sector in the country.

The All India Toy Manufacturers’ Association (TAITMA) based in Mumbai was set up in 1976 and has more presence in the Western region.

Delhi-based Toy Association of India was formed much later in 1995 and has over 500 industry members including manufacturers, exporters, importers, traders and testing units spread across the country. Most of the members are predominantly MSMEs.

The government offers the following subsidies for the sector:

Central Government Schemes

  • Scheme for granting recognition & registration to in-house R&D units

  • Remission of duties & taxes on exported products (RODTEP)

  • Duty Drawback Scheme

  • Export Promotion Capital Goods (EPCG) Scheme

  • Custom Bonded Warehouse Scheme

  • Increase in BCD for Electronic Toys (under HSN 9503) from 5% to 15% to encourage domestic manufacturing.

State support

  • Capital subsidy

  • Interest subsidy

  • Stamp duty exemption

  • Tax reimbursement

  • Electrical duty exemption

As for investment in India’s toys sector, 100% FDI is allowed under the Automatic Route.