Repairing the business environment for a thriving local toy industry


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So, if the toy industry is to truly thrive, this can only happen when the plethora of rules that keep the industry on the ground are set, when infrastructure costs are lowered, and when an industry has more access to technology. formal credit. (Representative image)

Considering the business potential, as well as the potential for job creation, Prime Minister Narendra Modi has done well to speak about the need to develop a vibrant local toy industry in the country which supplies all regions of the world. While the global industry is estimated at over Rs 7 lakh crore, the Indian market is small and even here the share of cheaper Chinese toys is quite large at the bottom of the market; as popular toys are based on entertainment content and intellectual property – GI Joe, Barbie, etc. – who reside in the West, India’s share must be limited; but even when these toys are produced under license, the license does not usually go to Indian companies, given the competition from China.

Shortly after the Prime Minister spoke about it, Karnataka Chief Minister BS Yeddyurappa spoke of setting up India’s first toy-making cluster in a 400-acre SEZ in Koppala and, he said , 40,000 jobs could be created in five years. However, the vast majority of Indian toy makers are tiny units, and apart from being scattered across the country, they cannot afford to move to expensive SEZs. So, if the toy industry is to truly thrive, this can only happen when the plethora of rules that keep the industry on the ground are set, when infrastructure costs are lowered, and when an industry has more access to technology. formal credit.

Indeed, the 2018-19 Economic Survey includes a chapter on “dwarf” companies (these are old companies that simply refuse to grow) which is particularly relevant in this context; according to the survey, half of the companies, even in the organized manufacturing sector, are “dwarfs”, but they represent only 13% of total employment. As the Survey points out, whether they are labor laws that include minimum wages or other incentives such as access to credit within the framework of priority sector lending standards or the use of the benefits of reservation or even price preference in government tenders, all of this acts as a deterrent when it comes to getting bigger. The law on labor disputes, for example, applies as soon as a company has more than 100 workers. If a company is incentivized to stay small, this acts as a natural cap on its ability to produce toys in large volumes or even of adequate quality. A look at the average size of companies – in terms of capital base or number of employees – in India compared to countries like China clearly shows. Such problems must be resolved if India is to become a major supplier not only of toys, but of most products.

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