Vantage | Why toys can be India's next big bet in manufacturing

The global toy industry has long been dominated by China producing over 70 per cent of the world’s toys with a staggering 56 per cent share in exports. However, recent developments indicate a potential shift as major toy manufacturers, including giants like Hasbro and Mattel, seek alternatives to China. The COVID-19 pandemic, coupled with concerns about quality and dependency, has prompted the exploration of new manufacturing hubs with India emerging as a promising contender.

For years, China has held a virtual monopoly on toy manufacturing primarily due to its cost-effective production capabilities and vast manufacturing capacity. However, the pandemic exposed vulnerabilities in this model, causing disruptions and raising concerns about the quality of Chinese-made toys. Notably, a 2007 scandal involving Mattel’s recall of 19 million toys tainted with lead further highlighted the risks associated with relying solely on Chinese production. Rise of India Major players like Hasbro and Mattel are actively seeking to diversify their manufacturing bases with India emerging as a viable option. India boasts a large working population, stable government policies and connectivity to key markets. One of the most significant advantages is the cost of labour, substantially lower than China. Global companies have expressed interest in shifting toy production to India, but progress has been slow. While India’s potential is undeniable, challenges hinder a swift transition. One major roadblock is capacity. India lacks sufficient toy manufacturing facilities. Companies looking to move production face lengthy timelines with finding a contractor taking up to 18 months and building a new factory potentially stretching to three years. Infrastructure limitations, including warehouses and last-mile connectivity, pose additional challenges. India has taken steps to address these challenges and attract toy manufacturers. In 2020, import duties on toys were raised from 20 per cent to 70 per cent, making importing toys into India less economically viable. The government is also setting up multiple production clusters across states, offering subsidies in the form of rent concessions, power tariffs and freight subsidies to incentivise toy makers. Despite these challenges, the market is witnessing a turnaround. From 2016 to 2020, China accounted for 86 per cent of India’s toy imports. However, by 2023, toy imports from China fell by 53 per cent, while toy exports from India surged by 239 per cent. The next step for India is to expand its market share globally, currently standing at just 1 percent. As the dynamics of the global toy industry undergo a transformation, India is positioned to challenge China’s monopoly. With the right policies, incentives and infrastructure development, India could become a significant player in the toy manufacturing sector offering a viable alternative to the traditional Chinese dominance. The journey may be challenging, but the potential benefits for both manufacturers and consumers make it a shift worth exploring. Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect Firstpost’s views. Read all the Latest News , Trending News , Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.