The Indian toy-making industry is transforming from an import-driven market to a rapidly expanding, export-oriented sector. For toolmakers who have long been associated with traditional industries such as automotive, electronics, and machinery, this industry offers an opportunity to diversify. As the toy-making industry in India grows, the demand for moulds, dies, and precision tooling specific to toy manufacturing will also increase. This article explores how the rise of the toy-making industry will present a significant avenue for Indian toolmakers to expand and thrive in a new and evolving market.
India’s toy market has gained momentum, driven by government initiatives like ‘Toycathon’ and ‘Aatmanirbhar Bharat’, which aim to boost domestic production and innovation. Additionally, the Toy Quality Control Order in 2021 significantly improved product standards, curbing the influx of substandard imports, primarily from China. Various news reports revealed that the government also increased import duties from the Basic Customs Duty on toys from 20% to 60% in February 2020, and subsequently to 70% in March 2023, further disincentivizing foreign products and stimulating local manufacturing.
Statistics from ITC’s Trade Map indicate toy exports steadily grew from $224.3 million in 2020 to $304.8 million in 2023. ITC’s Trade Map is an online database on international trade statistics, providing an array of useful indicators on export performance, international demand, alternative markets and the role of competitors from both the product and country perspectives. Despite China’s dominance in the global toy market, India has positioned itself as an emerging player, exporting mainly to developed economies like the US, UK, and Germany. As the domestic market expands, the Indian government has projected the toy industry to reach $3 billion by 2028, growing at a Compound Annual Growth Rate (CAGR) of 12%, revealed investment promotion agency Invest India on its website.
With over 1,000 toy manufacturers and 4,000 active units, India is gearing up to become a significant contributor to the global toy industry, state various research reports. The toy-making industry’s growth is underpinned by a large consumer base. According to a United Nations Population Fund’s State of World Population – 2024 report – approximately 24% of India’s population is aged 0-14, driving demand for toys domestically. Furthermore, rising disposable incomes and a growing preference for locally made toys, including traditional and eco-friendly options, contribute to the industry’s rapid expansion.
Opportunities for Diversification in the Tool and Die Industry
Indian toolmakers have traditionally focused on sectors like automotive and electronics. The growth of the toy-making industry opens a new avenue for them to diversify. Toy manufacturing requires precision moulds and dies, often involving intricate designs and multiple components. According to Mr. Manish Kukreja, CEO, Min Toy Pvt. Ltd. (Shinsei) and President, The All India Toy Manufacturers Association (TAITMA), producing a single toy might require anything between 6 and 20+ moulds, depending on the complexity of the toy being manufactured. This demand creates a substantial opportunity for Indian toolmakers to expand their expertise and cater to the toy sector’s unique requirements. The shift towards locally manufactured toys aligns with the capabilities of Indian toolmakers, particularly those equipped to handle precision tooling and diemaking. Several toolmakers have successfully diversified into this space, leveraging their experience and infrastructure from other industries. By entering the toy manufacturing sector, they can not only capitalise on the growing domestic market but also position themselves for export opportunities, given the rising demand for Indian-made toys abroad.
How Toolmakers Can Tackle Challenges
While the toy-making industry offers promising prospects, it also brings along new challenges for Indian toolmakers. Here’s how toolmakers could deal with some of the challenges:
Meeting Safety and Quality Standards: Toys, which are exported, are subject to stringent safety and quality regulations. Indian toolmakers need to ensure that their processes align with these standards. This challenge could be tackled by acquiring the required certifications and implementing the necessary compliance measures.
Investment in Specialized Equipment: The toy industry demands high precision and intricate detailing in moulds, which might necessitate specialised tooling equipment. While investing in this machinery and training skilled labour could incur substantial initial expenditure, these measures could prove beneficial in the long run.
Competing with International Competition: Despite the favourable policies and increasing domestic demand,Indian toolmakers still have to compete with established global players who dominate the toy manufacturing market. However, differentiating through quality, cost-efficiency, and innovation, could help them succeed.
Government Support and Policies for Indian Toolmakers
The Indian government has introduced multiple initiatives to support the local toy manufacturing ecosystem, which indirectly benefits toolmakers, such as:
– PLI Scheme for Toys: A Production Linked Incentive (PLI) scheme for toys is recommended with an outlay of INR 3,489 crore from 2024-25 to 2031-32. This scheme proposes to encourage domestic manufacturing, enhancing demand for local moulds and tooling solutions.
– Cluster Development: States like Karnataka have established toy clusters, such as the one in Koppal District, to centralise and support toy manufacturing. These clusters not only provide infrastructure but also offer incentives to MSMEs, which can include toolmakers entering the sector.
– Zero-Duty Market Access: Pre-trade agreements with regions like the UAE, as well as the IndiaAustralia Economic Cooperation and Trade Agreement, offer zero-duty access to these markets, boosting the export potential for Indian-made toys and the associated tooling. The above mentioned policies create a favourable environment for Indian toolmakers to tap into the expanding toy-making industry, reduce dependency on imports, and benefit from the growing focus on local manufacturing.
The Long-term Potential of Toy Manufacturing for Indian Toolmakers
The Indian toy-making industry is expected to grow consistently, presenting long-term opportunities for toolmakers. The shift towards eco-friendly and culturally significant toys is gaining traction, with international markets showing interest in sustainable Indian toys. As toy manufacturing continues to rise, there will be a growing demand for high-quality, precision tooling that caters to domestic and export needs. Indian toolmakers can explore collaborations with international toy companies to supply moulds
and dies, expanding their market reach. With the right investments and a focus on quality, Indian toolmakers can establish themselves as key players in the global toy tooling market. Additionally,
as toy production emphasises sustainability, toolmakers have the chance to innovate with eco-friendly materials and processes, aligning their services with future industry trends.
Advanced Technologies In Toy Production
– 3D Printing: This allows manufacturers to create detailed prototypes quickly and cost-effectively.
– Augmented Reality (AR) and Virtual Reality (VR): These can be integrated into toys to provide immersive and interactive play experiences.
– Automation and Robotics: These can improve efficiency, consistency, and quality control, especially for high-volume production and intricate assembly processes.
– Digital Tools: These can enable to manufacturers to create intricate and customizable designs, and streamline supply chain processes.
Future Outlook
The rapid growth of India’s toymaking industry offers a promising diversification opportunity for Indian toolmakers. With government support, favourable market conditions, and increasing demand for locally manufactured toys, toolmakers can leverage their expertise to cater to this booming sector. However, overcoming challenges like international competition, adhering to safety standards, and investing in specialised equipment will be essential. By collaborating, innovating, and investing strategically, Indian toolmakers can capitalise on this emerging market and position themselves for sustainable growth in the long term.
This diversification is not just an opportunity but a necessity for toolmakers looking to expand their capabilities and tap into a sector with enormous potential. As India continues its journey to become a global toy manufacturing hub, the tool and die industry is poised to
play a critical role in shaping the future of toy production.
This article was published in TAGMA Times October 2024 Edition.
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