The toy the industry, over the past year, has been the center of attention more than ever before. Starting with our Prime Minister’s call to industry in his monthly âMann Ki Baatâ speech last year to be âAtmanirbharâ in toys and become a global toy hub, there has been a lot action in the toy industry so far low-key. The Prime Minister called on the industry to be a ‘voice for the local’ and focus on the development of toys and games based in India and India, citing that we import most of the toys that are sold. into the country, resulting in an influx of foreigners exchanging a crore value of rupees.
In February 2021, the Virtual India Toy Fair 2021 was held with over 1,000 exhibitors, Toycathon 2021 was launched earlier this year to promote innovative ideas for toys and games and several seminars were held, all aimed at to promote awareness of toys and work towards increasing India’s share of the global toy market, estimated at over $ 90 billion.
At the same time, special attention has also been paid to improving the quality of toys made in India while ensuring that quality standards are maintained for all imports into the country. The new regulations established by the Bureau of Indian Standards (BIS) were implemented as of January 1, 2021. Today, all factories producing toys in India must be certified by the BIS and product testing has become mandatory. The factories from which toys are imported into India must also be inspected and certified by BIS. The higher import duties notified in the 2020 budget have allowed Indian manufacturers to compete effectively with imports from countries like China.
The results so far have been quite encouraging with a lot of design and development activities undertaken by Indian manufacturers. We have also seen India make rapid progress as a sourcing destination for many international toy companies. With consistent policies to regulate the quality of imported toys, the Indian toy industry, which currently holds only a tiny share of the global toy market, is expected to experience higher growth rates in the coming years. The global toy industry is large with over US $ 90 billion, and the future is heavily loaded in favor of India with its large population of children and a market that can only grow exponentially in the years to come. India’s toy industry must be ready to meet demand, which is sure to grow, and actions taken now will have a significant impact. Labor-intensive industry has the potential to provide employment opportunities on a very large scale.
For the industry to keep growing, it is absolutely essential for us to design and develop products in India that have global relevance. There is no doubt that we can do it. Funskool (India) Limited, besides being a source for several large international companies for the sourcing of their products, has been able to establish a distribution network for our own brands in more than 25 countries and the business is growing rapidly.
Developing our own products and brands is very important to support the domestic and export markets. Contract manufacturing for international toy companies has its limitations and is highly dependent on price competitiveness against other sourcing destinations. In the Indian domestic market, the main obstacles to growth are the low awareness of toys and their affordability. We must make parents aware of the need for toys in the development of the child. The ability to manufacture quality toys for the domestic market will result in higher accessibility and rapid growth of the industry.
For faster development of the Indian toy industry, it may be prudent to consider some of the following steps:
1. Concessional GST for products made in India. 12/18% are very high GST rates when we should try to make toys more affordable
2. Special Export Incentives for Exports of Brands and Products of Indian Companies Designed and Developed in India
3. Advertising and promotional expenses to benefit from tax advantages / subsidies
4. Tax breaks / subsidies on tooling expenses incurred by Indian companies to develop their own brands and products.
5. MEIS Scheme arrears to be released and RODTEP incentive rate to be notified
The domestic toy market is starting to emerge from the very difficult period induced by Covid-19. The closures ensured that malls and stores remained closed for long periods of time. Funskool has so far managed to remain relatively unscathed during this difficult time of Covid-19. We have become more focused on manufacturing for our international customers while simultaneously expanding the distribution of our own brands in overseas markets, resulting in strong growth in our overall export volumes. In the domestic sector, the focus was on the design and development of several new products, which were launched. We have also introduced a number of traditional toys and games which have shown good results. We are increasing the capacities of our three factories.
We regard the decline in domestic demand due to the pandemic as an aberration and have no doubt that the Indian toy market will grow exponentially in the years to come! Licensing is very important in the toy market and Indian companies may have limits on bidding for global licenses in the near future. The solution could be for Indian companies to partner with global toy companies for domestic manufacture. The Indian toy market will quickly reach significant levels and it may make sense for the toy majors to seek local partners for their Indian operations.