Regulatory policy

Mere rhetoric cannot be long-term policy for the toy industry

India is focusing on craftsmanship, a retrograde policy to carve out a place in the global high-tech toy market.

New Delhi: When Indian Prime Minister Narendra Modi, in his 76th Independence Day speech, said, “I also salute children who say no to imported toys. When a 5-year-old child says “No videshi (nothing foreign)”, #AatmaNirbharBharat (self-governing India) runs through his veins”, it is clear that India’s toy policy has taken shape. Obviously , the Indian government is eager to create toys with local flavors, also made by local manufacturers, mainly artisans, and to replace the booming toy market that had developed by adapting global themes.
There are three reasons for the approach taken by the Indian government. First, the lion’s share of toys imported and sold in India were made in China, a country with which India has hostile relations. New Delhi felt it was a low-hanging fruit to crowd out China, only affecting relatively well-to-do families who were not the target group politically. Second, by creating a toy import roadblock, the country would see an increase in toy manufacturing in the country, thereby creating employment and market opportunities.
Third, India intended to use the opportunity of the toy to promote its traditional craftsmanship and breathe new life into traditional craftsmanship by providing an economic incentive to artisans.
Clearly, the toy promotion rhetoric had a sociopolitical purpose, apparently more than the economic purpose of equaling China as a global toy manufacturing hub. This was made clear by the Prime Minister in his Independence Day speech and summed up in no uncertain terms.
A satisfied government recently told its parliament that the country’s toy exports increased by 61.38% over the past three years, from $202 million in the 2018-19 financial year to $326 million. during the 2021-22 financial year. Meanwhile, toy imports have decreased by 70% over the past three years, from USD 371 million in FY 2018-19 to USD 110 million in FY 2021-22. Indeed, the current account deficit for toys which was USD 169 million in 2018-19 has now turned into a surplus of USD 216 million in 2021-22. This encouraged India’s most widely read English-language daily, the Times of India, to write recently, “Forget Lego and Barbie! Gilli-danda, spinning tops, VikramBetal puzzles and other household-themed toys are making their way into Indian children’s homes. India’s toy sector policy is actually an effort to turn back the clock.
This change was influenced by several government policy interventions. Chronologically, the steps were as follows: (a) The Directorate General of Foreign Trade of India (DGFT) issued a notification on December 2, 2019 requiring sample testing of every consignment and no permission to sell toys unless that the quality tests are not conclusive. If unsuccessful, the shipment is either returned or destroyed at the importer’s expense. This directive made the unbridled importation of toys difficult; (b) The Basic Customs Duty (BCD) on toys was increased from 20% to 60% in February 2020. This decision led to an increase in toy prices; (c) But the most critical move was when the government issued the Toys (Quality Control) Order, 2020 on 25/02/2020. Through this order, the toys have been subject to the mandatory certification of the Bureau of Indian Standards (BIS) from 01/01/2021. According to the Quality Control Order (QCO), each toy must comply with the requirements of the relevant Indian standard and bear the standard mark under a license of BIS regulations. This QCO applies to domestic manufacturers as well as foreign manufacturers who intend to export their toys to India; (d) But the ordinance had to be amended on 11.12.2020 to exempt goods and articles made and sold by artisans registered with the Commissioner for Development (M/o Textile) as well as the registered owner and authorized users of a product registered as a geographical indication by the Office of the Comptroller General of Patents, Designs and Trademarks (CGPDTM). The QCO on toys was therefore only aimed at imports.
In addition, BIS made special arrangements on 2020.12.17 to license micro units manufacturing toys without testing facility for one year and not insist on establishing in-house facility. The bureau also granted 843 licenses to domestic manufacturers from a toy safety perspective, of which 645 licenses were granted for non-electric toys and 198 licenses for electric toys. In addition, six licenses were issued to international toy manufacturers.
All of these measures contributed to a sharp drop in toy imports, although there was no corresponding increase in exports. In fact, the global toy market is not exactly a craft market, but rather electronic, mechanical and plastic toys and includes licensed toys, including movie derivatives, characters cartoons, high-tech toys and educational toys (including ‘STEM’–Science, Technology, Engineering and Mathematics–items). In addition, the craze for mobile games and e-sports games has impacted the classic toy market. Sadly, India only focuses on handicrafts – a rather backward policy to carve out a place in the $104 billion global market. Currently, India represents just under 0.5% of the global market. China, on the other hand, manufactures 75% of all toys in the world. At present, Indian politics does not even seek to make up for missed opportunities.
Official reports suggest that Indian policymakers are only happy with the current restrictive policy. An official statement appeared to be confident that during the 13th International Toy Biz B2B (Business to Business) Expo held in New Delhi from July 2-5, 2022, all 96 exhibitors showcased the diverse product category. ranging from traditional plush toys, construction equipment toys, dolls, construction toys, board games, puzzles, electronic toys, educational toys, ride-ons, etc. All toy products were “Made in India” products, produced in the country by small, medium and large companies. Toys with a GI tag such as Chennapatna, Varanasi, etc. were also exhibited. Officials were happy that the exhibit featured toys based on the Indian ethos and value system duly endorsing the “Vocal for Local” theme. Obviously, there is no mood to emerge as the global toy supplier like China has emerged.
The effort to engage artisans in creating marketable toys based on the educational and recreational needs of Indian children cannot be a sufficient tool to create a vibrant toy manufacturing sector in the country.
The bulk of Chinese toy exports are produced for foreign brands on an OEM basis. Lately, due to rising costs, some of the manufacturing has shifted to other countries like Vietnam and India. In fact, global toy maker Hasbro is the largest exporter of toys from India. Obviously Hasbro does not sell Ramayana or Mahabharata based toys from India. Indian makers have much to learn from these global manufacturers and use their guidance to create a vibrant toy manufacturing base in the country. A simple rhetorical salute from the Prime Minister to Indian children who have purchased locally flavored toys will not help. Toy politics requires careful introspection. Maybe Niti Aayog can play a role here.