India is one of the biggest beneficiaries of the “Made in China” campaign and the country is about to push it even further. On September 4, 2023, India announced the launch of a Toy Park in Noida, close to New Delhi. The Park will support several industrial units for manyfacturing and exports of toys.
This push towards local toy industry has empowered India to grow independent from China’s toys markets. According to the Trade Promotion Council of India, total toy imports witnessed a significant decline from $257.65 mn during the fiscal year 2013-14 to $62.39 mn in the fiscal year 2022-23, a 75% decrease. At the same time, toy exports saw a surge from $36.91 mn in 2013-14 to $153.88 mn in 2022-23.
India Moves Away From Chinese Imported Toys
According to a study by KPMG-FICCI, one of the biggest advantages of India is the lower cost of labour. India’s cost of labour per hour is $1.7 compared to China’s $5.8. This gives a competitive edge to India’s plastic and plush toys.
Concerning China’s plastic toy market, KPMG said,”Capturing even 5% of this through focused policy steps could go a long way in helping India’s exports meet the half-billion mark”. KPMG also projects the Indian toy industry to grow to $2 bn by 2024-25 out of which 40% will be contributed by domestic production. This is a massive growth when compared to the 15% domestic production in 2019-2020.
Another big reason for the decline in toy imports from China is the low-quality standards. India’s government has also issued a Toys (Quality Control) Order in 2020 to ensure that the imported toys match the Indian standards for the safety of toys and bear the standard mark (ISI mark) under license from the National Standards Body. However, several toys from China failed this test.
Moreover, the government has raised the import duty on toys from 60% to 70% in the 2023-24 budget, to boost local manufacturing of these products.
Will India Overtake China in the Global Toy Market?
China has been the world’s largest toy market exporting 59.2% of the total toy trade value in 2022, according to Statista. However, its toy exports are taking a hit due to a weak global economy, trade wars, and rising production costs. As a result, India is trying to compete and capture some key markets.
With a market size of about $18.9 bn, China’s toy market is nearly eighteen times that of India. The country also has more expertise in making electronic and mechatronic toys, where India is lagging currently.
However, with the government-imposed import restrictions, Indian toy makers will be compelled to boost their electronic toy production capabilities. India’s first toy manufacturing cluster at Koppal in the southern state of Karnataka spread over 400 acres, is already working towards this goal.
To gain an edge over China, India is focusing more on innovative toys that have strong roots in its culture. The country aims to carve a niche in sustainable and eco-friendly toys which have high demand, globally. Moreover, India is trying to create more end-to-end manufacturing clusters to compete with China.
Given the current numbers, India has a long way to go before it takes on China’s toy market at a global level. However, with India’s increasing focus on toy manufacturing at home, China has to strive to maintain its important export market.
(Excerpted from Asia Fund Managers)
