1318909 SIP myths you must know!

It’s a Toy Story that will be music to Indian ears. Moving far beyond toying with the idea of “China Plus One” strategy, global majors are using India as a sourcing hub of their produce, thereby pushing the country’s toy industry up the export ladder, the Business Standard has reported.

Buoyed by the shift in strategy of global brands, India’s toy industry is taking big steps, registering a rise of 239% in exports between FY15 and FY23. At the same time, imports have come down by 52% and these two forces acting in tandem has turned India into a net exporter.

The other factors that have turned the scales in favour of India is raising the basic customs duty to 70%, overall protectionism of the government with respect to this sector and a policy that Bureau of Indian Standards (BIS) needs to approve toys that can be sold in the country.

Among the brands that are sourcing from India are giants such as Hasbro, Mattel, Spin Master, and Early Learning Centre, Dream Plast, Microplast, and Incas. The BIS requirement which has become mandatory has also reduced India’s India’s dependence on China for toys which was 80% once.

“I don’t think any Chinese capacity is approved by BIS. Imports have been replaced by domestic Indian products. Ten years ago, hardly any sourcing was happening from India. Now, many companies have set up a base in India,” R Jeswant, CEO of Funskool told the newspaper. Incidentally, Funskool is a company owned by Chennai-based MR. Funskool is a regular supplier to global brand majors such as Hasbro, Spin Master, Early Learning Centre, Flair and Drumond Park Games.

As much as 60% Funskool’s output is shipped to export markets and the destinations include as many as 33 countries in the US, GCC and Europe. The list where India-made toys are going is expanding and the number might quickly rise to 40, said Jeswant.

Pawan Gupta, owner of R P Associates, which is a Delhi-based distributor, importer and exporter of toys said, “The Indian production has gone up and many people have set up their base in India. Many of the buyers, who were sourcing from China, are trying to shift to other countries and India is one of them. There are many big companies like Microplast, Dream Plast and Incas in this list. Companies like Hasbro and Mattel are also sourcing from India on a large scale.”

The BIS mandate kicked in from January 1, 2021 when New Delhi proscribed the sale of toys that do not carry BIS certification. To erect a protectionist fence around the Indian industry, the government raised the basic customs duty on toys from a low 20% to 60% in February 2020 and further to 70% in March 2023.

While the BIS certification has benefitted the Indian industry as a filter, it has also acted to the detriment of many small units in the country. The Toy Association of India (TAI) said that only about 1,500 units have got the BIS licence out of about 6,000 manufacturers, and the norms need to be relaxed for the benefit of these units.

“In the MSME sector, the government has relaxed a lot in the last two years. Despite that, it is not manufacture-friendly. But it is a fact that a lot of startups are emerging, and Gujarat is fast becoming a toy manufacturing hub,” said TAI president Ajay Aggarwal.

Market research firm IMARC has said the Indian toy industry was valued at $1.7 billion in 2023. By 2032, it could reach a valuation of $4.4 billion, registering an annual growth rate of 10.6%.