Modi government making concerted efforts to make India a global toy hub

Modi government making concerted efforts to make India a global toy hub
Modi government making concerted efforts to make India a global toy hub
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The production-linked incentive and phased manufacturing programme for the toy sector could attract many global toy makers to shift base to India from China. And if Indian start-ups can leverage India's traditional games and take them to global markets, the industry can quickly scale up to global standards.

The Modi government has identified 24 sectors, including the very labour-intensive toy manufacturing sector, in which it will push domestic manufacturing and position India as an attractive manufacturing destination.

The Modi government recently gave a massive boost to its goal of Atma Nirbharta (Self-Reliance) by approving production-linked incentive (PLI) schemes 10 sectors. This follows the stupendous response received by the PLI scheme it had rolled out for global smartphone manufacturers to move some parts of their production facilities from China to India.

Toys among sectors that will get incentives for local manufacture

The Modi government has identified 24 sectors, including the very labour-intensive toy manufacturing sector, in which it will push domestic manufacturing and position India as an attractive manufacturing destination via the PLI and phased manufacturing programme (PMP) schemes.

Indian companies have a tiny share of the global toy market

Addressing the 68th edition of his monthly Mann Ki Baat radio programme, Modi said: “You will be surprised to know that the global toy industry is worth more than ($90 billion) ... but India's share is very little in this. Now, just spare a thought for a nation which has so much of heritage, tradition, variety, young population... Will it feel good to have such little share in the toy market We can do two things through toys - bring back the glorious past in our lives and also spruce up our golden future. To my start-up friends, to our new entrepreneurs I say team up for toys. For everybody it is the time to get vocal for local toys.”

He called upon the country's young talent and start-ups to put their thinking hats on to make games in India for the world.

Hasbro considering investing in India

Modi called upon the country's young talent and start-ups to put their thinking hats on to make games in India for the world.

Already, Hasbro, the world's largest publicly listed toy company, which sources about two-thirds of all its toys from factories in China, is looking at the prospects of shifting a part of its global supply chain to India (or Vietnam).

“We're increasingly spreading our footprint and adding new geographies for production globally,” Brian Goldner, Chief Executive Officer of the company, which has licenses for popular franchises such as Frozen and Avengers, told news agencies recently.

The company is looking at reducing its reliance on Chinese-made goods to 50 per cent by next year. The new incentive schemes place India in a very good position to attract Hasbro to this country.

Mandating quality standards to check cheap Chinese imports

India's global toy dreams was boosted by Reliance Brands buying the UK-based Hamley's, the world's oldest toy brand.
India's global toy dreams was boosted by Reliance Brands buying the UK-based Hamley's, the world's oldest toy brand.

Then, like the Chinese government, which provided both incentives and protection to its toy manufacturing sector in its early years, the Modi government, too, has issued a Quality Control Order (QCO) specifying strict quality controls for toy imports. This will discourage the indiscriminate import of inferior and cheap Chinese-made toys, many of which have been found to be harmful to children, that have flooded the Indian market and made it difficult for Indian rivals to compete with them.

Meanwhile, the India's global toy dreams was boosted by Reliance Brands, owned by Asia's richest man Mukesh Ambani, buying the UK-based Hamley's, the world's oldest toy brand.

Labour law reforms to help toy industry

The PLI and PMP schemes, the labour reforms and corporate tax rates that are among the lowest among peer nations now offers India a real chance to make up for lost time.

The recent easing of India's labour laws and especially the provision facilitating time-bound employment will come as a positive for the Indian toy sector - and for foreign companies that invest in it - as the industry tends to be seasonal, with demand peaking during the Thanksgiving-Christmas-New Year festival in Europe and the US and then tapering off.

The ability to adjust their staffing relative to market demands will provide Indian factories a key competitive advantage that has been missing so far.

Since the toy sector is labour intensive and many products at the lower end of its value chain do not need highly skilled labour, it is ideally suited to absorb many of the army of millions of young men and women who join the country's work force every year.

India missed the bus in the past

The recent easing of India's labour laws and especially the provision facilitating time-bound employment will come as a positive for the Indian toy sector.
The recent easing of India's labour laws and especially the provision facilitating time-bound employment will come as a positive for the Indian toy sector.

India has for long tried to emerge as a global manufacturing hub but without much success. A combination of ideological blinkers, bureaucratic red tape, poor infrastructure, opaque systems and the absence of sufficient linkages with global supply chains were cited as major hindrances to India's manufacturing ambitions.

Then, India also missed out on several waves of globalisation that drove the integration of East Asia, South East Asia and then China into the world economy.

The PLI and PMP schemes, the labour reforms and corporate tax rates that are among the lowest among peer nations now offers India a real chance to make up for lost time.


India Global Business
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