A Production Linked Incentive (PLI) scheme is the key to beating competition from countries such as Vietnam and overcoming the cost disability for Indian toy manufacturers, the Toy Association of India has said.
The PLI scheme was approved in 2020 and currently covers 14 sectors, including steel, textiles, electronics, IT hardware, medical devices, pharmaceutical products, telecom and drones among others. Discussions to include other sectors are ongoing.
In the past, there have been several statements from the government on expanding the PLI scheme to toys. On June 13, this year, a statement to this effect was again made by Secretary to the Department for Promotion of Industry and Internal Trade (DPIIT), Rajesh Kumar Singh, but the scheme is yet to be announced.
“Discussions for the implementation of a PLI scheme on toys, footwear as well as for components of new age bicycles are in reasonably advanced stages,” Singh had said during a press briefing.
“India currently suffers a significant cost disability vis-a-vis China and the introduction of a PLI which was promised, is the only way to bridge this gap,” Chairman of the Toy Association of India, Manu Gupta said, speaking to Moneycontrol on the side-lines of 14th Toy Biz Expo on July 10.
“With a China plus one policy, Vietnam was able to export toys worth $ 6 billion last year. Indonesia is emerging as the next strong market. India needs a PLI to match the pace of growth,” he added.
The Indian toy industry is among the fastest-growing globally, projected to reach $ 3 billion by 2028, growing at a CAGR of 12 percent between 2022-28, according to Invest India.
In the last few years, the government has introduced several policy measures to give domestic toy manufacturing a boost, including tripling the import duty on toys and its components from 20 percent to 60 percent in 2020. It was further increased to 70 percent with a view to curbing imports and boosting local production.
It then made toy quality certification mandatory and enforced quality control for imported toys from September 1, 2020, to ensure that only products conforming to standards enter the country.
India has recently turned a net exporter of toys, during 2020-21 and 2021-22, ending decades of import dominance. Over the past 3 years, toy imports have come down by 70 percent and exports have gone up 61 percent.
However, much more needs to be done to make India a global hub of toy manufacturing, Gupta points out. High factory setup costs, import dependencies (for basic components), lack of innovation and design, infrastructural limitations, competition from subsidised toy exports, and the absence of an exclusive Toy Export Promotion Council or Toy Board are some of the other issues plaguing the sector, toy manufacturers at the toy biz expo said.
PLI continues to remain a prime demand of the sector to address these challenges.
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