Policy Update
Varalika Raizada
Introduction
Toys bring society’s culture, values and ethos to life. Toys hold a significant place in Indian culture in nurturing the lives of children, being used for both entertainment and educational purposes. To revive this cultural tradition and legacy, efforts are being made to bring back and promote traditional Indian toys as symbols of Indian cultural and educational values, highlighting the traditional artisanal skills.
Prime Minister Narendra Modi in his ‘Mann ki Baat’ speech expressed his vision to establish India as the global toy manufacturing hub of the world. To make that vision come to fruition the National Action Plan for Toys (NAPT) was launched in 2020 to promote high-quality toy designing and production systems in India. The main objective of the NAPT is to enable the design of toys, use toys as learning tools, ensure standardised quality toys, and promote indigenous toys of India. Toys is a key sector under the broader vision of Aatmanirbhar Bharat, and essential to the Make in India programme and Vocal for Local initiatives.
Background
India was once self-sufficient in toy manufacturing with barely 10% imports from other countries like the USA, the UK, Germany, France, Italy, and Japan. The Indian toys were environmentally more sustainable as compared to the present plastic toy market. They were manufactured using eco-friendly and renewable materials like wood, polymer, wood pulp, rubber and metal.
However, when the Indian economy was opened under the LPG policies to get more investments, the market for Indian toys declined due to the entry of foreign manufactured toys, primarily from China, Hong Kong, Taiwan, the Netherlands and Sri Lanka. After the 1990s, the Indian toy market became largely import-dependent and the domestic industries declined. Till 2020, 71.1% of toys were being imported in India with the domestic market being highly fragmented. Under the aegis of the Atma Nirbhar mission to be self-sustaining and for the revival of Indian cultural tradition the NAPT was launched.
The NAPT aimed to make India self-sufficient in toy manufacturing for domestic needs and to become an exporter for the international market. The Government of India, under this plan, encouraged startups and entrepreneurs to produce toys and games “for India and of India” to meet the rising domestic demand, reducing imports and increasing India’s global export potential. At present China dominates the international toy industry with nearly 58.7 % share in the international export market. The efforts have already begun to expand the Indian toy industry by raising import duties, issuing Bureau of Indian Standards (BIS) for imported toys and providing financial incentives and subsidies for domestic manufacturers to export globally.
Objectives
The national action plan for toys aims to grow the domestic toy industry by facilitating innovation, encouraging sustainability and enabling competitiveness. The key objectives of the plan are:
- Bolstering toy manufacturing infrastructure: This involves the setting up of toy clusters, manufacturing hubs and toy repositories across India, the development of subsidy schemes to incentivise manufacturing and exports, and the creation of India’s first ‘Toy Museum’.
- Promoting innovation and R&D: This includes promoting innovation in designing and production of toys, skill development of artisans with modern practices, organizing competitions, hackathons and challenges to encourage creativity and development of toy laboratories to undertake testing and monitoring of quality of the toys.
- Integrating toys with education and culture: This involves specifically designing toys and games for educational purposes for subjects such as history, mathematics and science. To teach about Indian culture, the production of indigenous toys such as puppets, wooden dolls, clay toys and tribal games are encouraged.
- Encouraging environmental sustainability and digital presence: This includes conducting virtual and physical outreach events such as organizing annual toy fairs to display the Indian toy culture, boost local product sales and promote toys made with eco-friendly and sustainable materials.
Policy Implementation and Progress
The Implementation of the NAPT follows a collaborative approach involving 14 ministries, government departments and industry stakeholders. The central responsibility for the implementation of the NAPT lies with the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce & Industry. The other 14 Central Government Ministries and Departments include The Ministry of Micro, Small and Medium Enterprises (MSME) to fund small toy manufacturers, craftsmen and startups; the Ministry of Education to carry out initiatives like toy-based pedagogy under the National Education Policy (NEP) 2020; the Ministry of Textiles and Ministry of skill development to reskill and prepare artisan workforce; BIS to ensure quality and safety standards of the products; industry associations and state governments.
With the launching of the NAPT, the Indian toy manufacturing industry experienced robust growth. Between the fiscal year 2014-15 and 2022-23, imports decreased by 52% from 332.55 million to 158.7 million. Concurrently, the toy exports increased by 239% from 96.17 million to 325.732 million. These developments were possible due to multiple initiatives.
Graph: Indian toy exports to the world (2014- 2023)
Source: The Wire
Fiscal Efforts
Fiscal support has been extended under the Production-Linked Incentives (PLI) scheme to help manufacturers improve their competitiveness, advance technologies, invest in research and design, and improve quality standards. This PLI scheme will assist in the development of a toy manufacturing ecosystem for the production of high-quality toys for both national and international markets. Furthermore, the Ministry of MSME provides financial assistance under the SFURTI (Scheme of Fund for Regeneration of Traditional Industries) by funding infrastructure development, machinery and capital needs of small craftsmen. The budget presented in February 2025 announced investment of INR 3,489 crore for the PLI scheme to expand domestic toy manufacturing.
Infrastructure Development
One important aspect of the success of this plan is the availability of necessary infrastructure. There are specific provisions notified by the BIS to support infrastructural development in the form of manufacturing hubs, testing facilities and toy repositories. BIS has granted licenses to micro-scale units without the need for establishing in-house testing facilities for three years. More than 1454 licenses were granted to domestic manufacturers and about 36 licenses to foreign manufacturers for toy making till January 2024.
Additionally, the Common facility centres (CFCs) set up by the Ministry of MSME provide common facilities to small artisans and manufacturers for toy production and skill development. Eight toy manufacturing clusters were approved by the government of India, with funding of INR 2,300 crores, one each in Karnataka, Uttar Pradesh and Tamil Nadu, three in Madhya Pradesh, and two in Rajasthan. For both raw material suppliers and toy producers, these toy clusters are probably going to improve supply chain efficiency.
Education and Cultural Promotion
A goal of this action plan was to use toys as a source of learning and education. Toys play the role of a catalyst for enhancing curiosity and sociability among children. The demand for modern electronic and AI toys is seeing an upward trajectory, as a medium for delivering Science Technology, Engineering and Mathematics (STEM) education. The use of region specific toys can aid education about different cultures.
Introduction of the toy-based pedagogy in NEP 2020 potentially transformed teaching and learning methodologies. The usage of puzzles and games in teaching, introducing modules entirely based on activities and games to develop competencies and embedding the curriculum with Indian cultural values are a few aspects of the NEP 2020 policy which propagate the objectives of the NAPT.
Digital Outreach
In India, speciality stores, and supermarkets are the largest distribution channels for toys. With the rise of the digital economy, the use of online retail markets has become necessary to increase market access and boost sales. Spirit conducted knowledge-sharing workshops with Flipkart, Walmart and the Toy Association of India. This workshop is intended to create synergies between the toy manufacturing industry and the stakeholders. This interaction with global online retail marketplaces would be intended to share knowledge on accessing the global market, required quality standards and enhancing capabilities in global toy supply.
Additionally, inter-ministerial India toy fairs are conducted annually to showcase the toys. Due to COVID restrictions the annual toy fairs in 2021, and 2022 were conducted on online platforms. The first physical toy fair was conducted in Pragati Maidan in 2023. National-level toycathons were also conducted in 2021, and a Swachh toycathon in 2022 to promote innovation and creativity in designing sustainable indigenous toys. Such online and offline event outreach aimed to bring together stakeholders from the toy industry including manufacturers, startups, artisans and toy associations on one common platform to share knowledge and crowd-source solutions faced in the toy manufacturing industry.
Exports and import duties
The Government of India increased the Basic Customs Duty on toys from 20 to 60% in 2020 and eventually 70% in 2023, to achieve the goal of making India the net exporter of toys in the international market. The year 2020-21 saw the lowest imports, growing annually at the rate of -24.2 per cent.
The Toys Quality Control Order, effective from 2021, was launched requiring all toys to adhere to seven Indian standards for safety of toys and display the ISI mark mandatorily as part of the Bureau of Indian Standards (BIS) certification. This was done to verify the quality of toys and compliance with safety standards. India also worked out Free Trade Agreements (FTAs) with partner countries like India- UAE Comprehensive Partnership Agreement (CEPA) and India the Australia Economic Cooperation Trade Agreement (ECTA), to provide for Zero duty market access for Indian toy exports.
Economic, Social and Environmental Sustainability
The indigenous toys of India follow the upcoming trend of sustainability in the toy industry. The promotion of these toys can lead to social, environmental and economically sustainable outcomes for the country. The recycling and upcycling of the toys can extend their lifespan and reduce waste. Additionally, the carbon footprint associated with production of toys can be decreased by using traditional manual methods of making toys. India can position itself as the world leader in environmentally friendly toys while maintaining its cultural values and supporting local artisans.
Challenges
Domestically, the Indian toy market is valued at $2 billion, offering a platform to boost manufacturing, revive cultural heritage, and generate employment opportunities. By increasing its exports in the coming years, India has the potential to become the leader in toy manufacturing, owing to the large low cost workforce, rising manufacturing industry and rich cultural heritage. However, certain challenges pertaining to fragmentation of production units, unorganised workforce, dependence on imports and lack of advanced technology need to be addressed.
- Highly fragmented and large unorganised sector– the toy manufacturing clusters are highly fragmented. 60% of artisans and craftsmen are unorganised, who lack skills, equipment and modern technology. This makes harnessing the comparative advantage of low cost labour difficult.
- Lack of large end to end integrated manufacturing units: Indian toy manufacturing units are extremely small units, comprising 75% micro units and 22% small and medium enterprises. Lack of standardized large scale production makes beating China’s mass production difficult.
- Import dependency: According to a report by KPMG and FICCI, despite India’s self-reliance stance, India will still have to import certain important raw materials to manufacture toys. For example electronic toys require batteries which will need to be imported.
- Lack of investments in toy design institutes and R&D: The fragmented and small manufacturing units cannot afford machines and equipment that meet the global standards. The traditional toy industry in India is largely manual and thus cannot meet the global competitive speed. R&D and collaborations with tech companies is required to develop sustainable production processes.
Way Forward
The union budget 2025 outlines a bold vision by finance minister Nirmala Sitharam to boost the production of high-quality and sustainable toys, unique to India to represent the “Made in India” brand. According to a report by Invest India, the Indian toy industry is expected to rise to $3 billion by 2028, growing at a CAGR of 12 per cent between 2022-28.
From growth prospects, the West’s China +1 Strategy, where numerous MNCs are trying to find alternative destinations to reduce dependence on China, aligns well with India’s NAPT initiative . Countries looking for alternatives to the Chinese toy market can use India as an alternative manufacturing and import destination. This strategy can attract foreign investment and boost India’s manufacturing sector.
India has untapped potential in the global toy market which needs to be prioritized through innovation, and creativity to succeed in the global contemporary market. The Indian workforce of artisans needs to be updated with the latest technology and equipment to match the global toy market. At the same time labour laws and regulations protecting artisanal workers need to be in place to formalise and organise the sector.
India needs to adopt a multipronged strategy by involving all the stakeholders ensuring participation of the private sector in the toy industry for setting up of large scale manufacturing units. Financial support should be provided through subsidies, tax incentives and affordable credit and investments need to be made into R&D to reduce the import dependency. The protectionist approach of India needs to be balanced with adequate competitiveness to ensure efficiency.
The Indian toy industry must overcome the challenges if it is to reach its full potential. Enhancing technical expertise, encouraging teamwork, and establishing efficient procedures and quality standards are some things that need to be dealt with. Overall this industry is experiencing growth and can have potential benefits for the overall economy of India at international and national levels.
References
- Agarwal, M. K. & Nitya Gupta. (2023). Government Thrust on Toys Industry as an emerging sector in India. In Journal of Tourism and Sports Management (Vols. 5–3, pp. 1727–1737). SciTech Central Inc. https://www.scitcentral.com/documents/9b0f5acc1babb88ec8fb59bb5992b087.pdf
- FICCI & KPMG. (2021). State of play: India’s toy story- Unboxing fun and beyond. https://assets.kpmg.com/content/dam/kpmg/in/pdf/2021/09/kpmg-India-toy-industry.pdf
- Making headway: toy manufacturing sector in India. (2021). Savills plc. https://www.savills.in/research_articles/165611/203542-0
- Parkash. S (2023). Toy Industry. Lok Sabha. Government of India, Ministry of Commerce & Industry, Department for Promotion of Industry and Internal Trade. https://sansad.in/getFile/annex/259/AU432.pdf?source=pqars
- Press Information Bureau. (2022, Jan 20). Toy-based pedagogy is in alignment with the NEP 2020 and Prime Minister’s vision of “Vocal For Local” – Dr. Rajkumar Ranjan Singh. Government of India. https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1791279
- Press Information Bureau. (2023, Feb 06). Promotion of Toy Industry. Government of India. https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1896715
- Press Information Bureau. (2024, Feb 02). Govt. creates conducive manufacturing ecosystem for toy industry. Government of India. https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2002099
- Press Information Bureau. (2024, June 11). DPIIT to conduct knowledge sharing workshop with Flipkart and Indian Toy Industry on June 12. Government of India. https://pib.gov.in/PressReleasePage.aspx?PRID=2037089
- Press Information Bureau. (2025, Feb 01). National Manufacturing Mission to cover small medium and large industries for furthering “MAKE IN India” announced in Union Budget 2025-26. Government of India. https://pib.gov.in/PressReleseDetailm.aspx?PRID=2098392®=3&lang=1
- Singh, B. R. C. a. S. (2024, August 1). Is India’s toy exports success sustainable? – The Wire. https://thewire.in/economy/is-indias-toy-exports-success-sustainable
- Yadav, H. S., Tomar, V. P. S., & Verma, B. P. S. (2023). Promotion of Toy Industry. Rajya Sabha. Government of India, Ministry of Micro, Small and Medium Enterprises. https://sansad.in/getFile/annex/259/AU432.pdf?source=pqars
About the contributor: Varalika Raizada is a research intern at IMPRI.
Acknowledgement: The author extends her sincere gratitude to Aasthaba Jadeja and fellow interns, who provided guidance throughout the process.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
Read more at IMPRI:
National Supercomputing Mission-2015
National Urban Livelihoods Mission 2013: Creating a safe haven for the urban poor
