Moving away from PLI, Centre mulls customised scheme for toys

The PLI scheme aims to boost manufacturing by offering financial incentives tied directly to measurable outcomes such as higher production and incremental sales. However, the government is of the view that toys could benefit more from a custom-designed plan.

The Centre is working on a new scheme to boost manufacturing of Made in India toys, a senior government official said on May 19, a move that signals a shift away from the long-pending plan to extend Production Linked Incentive (PLI) scheme for the domestic toy makers.

The PLI scheme aims to boost manufacturing by offering financial incentives tied directly to measurable outcomes such as higher production and incremental sales. However, the government is of the view that toys could benefit more from a custom-designed plan.

“We are bringing in a sectoral scheme for toys soon, it won't be a PLI but it aims to do what the government did with smartphones. The relevant ministry is currently working on the modalities,” the official said.

The fresh plan for toy manufacturers is likely to be similar to the recently-unveiled Electronics Component Manufacturing Scheme (ECMS) that provides differentiated incentives linked to either turnover or capex, or both, in certain cases.

Read More: Indian toy makers eye bigger share in US market amid China tariff spree

The Rs 23,000 crore ECMS has already received tremendous response, attracting 70 applications within 15 days, Union Minister Ashwini Vaishnaw had said on May 18.

While the interim Budget for 2024-25 had recommended extending the PLI scheme with an outlay of Rs 3,489 crore, pending Cabinet’s approval, only a token provision of Rs 1 lakh was provided.

Subsequently, in the Union Budget presented on February 1, 2025, Finance Minister Sitharaman did not mention the PLI scheme and instead said the Centre will build a national action plan to make India a global hub for toys.

Read More: Will bring policies to promote manufacturing of toys: Commerce Minister Piyush Goyal

While a PLI scheme has been a long-standing demand for the industry, the Centre has been moving away from the incentive-linked plan, given its inconsistent gains. The change in approach comes as less than 10 percent of the funds allocated in the PLI scheme have been utilised since its inception.

The government has committed around Rs 1.97 lakh crore for various PLI schemes for a period of five years starting 2021-22 to help bring scale and size in key sectors, create and nurture global champions and provide jobs to youth.

While sectors like large-scale electronics manufacturing have seen unparalleled success, others such as steel and textiles have lagged behind. Given this, the government is now exploring a non-PLI scheme to ramp up production and exports of Indian toys.

Exports of Indian toys had dropped to $152 million in 2023-24 from $177 million in 2021-22 in the face of slowing global demand.