INDIA BECAME THE NET EXPORTER OF TOYS

According to an official statement on 2nd February 2024, From the fiscal year 2014-15 to 2022-23, there was a 239% surge in toy exports from India, while imports saw a 52% reduction, positioning India as a net exporter of toys.

Status of Toy industry in India

1. Toy Industry Overview:

   1. Evolution of Policy: The industry has evolved from the restrictive "permit license raj" era to embracing the 'Make in India' campaign.
      1. The study ( conducted by IIM Lucknow) credits the 'Make in India' initiative for the industry's recent achievements.

2. Trade Balance Transformation:

   1. From Negative to Positive: The trade balance improved from a deficit of Rs. 1,500 crore in 2014-15 to a surplus starting in 2020-21.

      1. Factors Contributing to the Shift:

         1. Increase in import duty from 20% to 60% in February 2020.
         2. Implementation of non-tariff measures such as Quality Control Orders (QCO) and mandatory sample testing.
         3. Global import disruptions due to COVID-19.

      2. Recent Trends in Net Exports:

         1. Reduction in Net Exports: Net exports decreased from Rs. 1,614 crore to Rs. 1,319 crore in 2022-23.
         2. Sectoral Impact: The decline was more pronounced in toys (31%) compared to the overall toy sector (18%).

Government Initiatives to Boost Made in India Toy Exports

1. Quality Assurance Measures:

   1. As of 02.12.2019, the DGFT mandated sample testing for every toy consignment, with sales permitted only after passing quality tests.
   2. Failed consignments are returned or destroyed at the importer's expense.

2. Custom Duty Adjustments:

   1. Basic Custom Duty on some toys (HS Code-9503) was raised from 20% to 60% in February 2020, and further to 70% in March 2023.

3. Mandatory BIS Certification:

   1. The Toys (Quality Control) Order issued on 25.02.2020 requires compulsory BIS certification for toys effective from 01.01.2021, applicable to both domestic and foreign manufacturers targeting the Indian market.

4. Exemptions for Artisans and GI Products:

   1. Amendments on 11.12.2020 to the Toys QCO exempt products made by artisans recognized by the Ministry of Textiles and those registered as Geographical Indications.

5. Support for Micro Scale Units:

   1. On 17.12.2020, BIS introduced provisions to grant toy manufacturing licenses to micro units without testing facilities for one year, later extended to three years based on industry feedback.

6. BIS Licensing:

   1. As of January 2024, BIS has issued 1454 licenses to domestic and 36 to foreign manufacturers for toy safety compliance with IS 9873/IS 15644 standards.

7. National Action Plan for Toys:

   1. In 2020, a comprehensive plan was developed to
      1. Promote local toy manufacturing and position India as a global toy hub involving collaboration across 14 Central Ministries/Departments with 21 action points under themes like
         1. Trade promotion,
         2. Indigenous toy design, and
         3. Toys as educational resources.

8. Free Trade Agreements:

   1. Recent FTAs, including with the UAE (CEPA) and Australia (ECTA), offer zero duty market access for Indian toy exports, enhancing their global competitiveness.

Challenges and suggested Way Forwards

Parameter	Challenges	Way Forward
Domestic Productive Capabilities	Analysis from the Annual Survey of Industries suggests no significant improvement in productivity metrics (2014-15 to 2019-20).	Promote investment in modern technology, R&D, and skill development, to increase labor productivity.   Enforce quality control measures and industry-specific standards to align with international benchmarks and enhance the global reputation of Indian toys.   Encourage partnerships between industry stakeholders, academia, and government to bridge infrastructure gaps and foster innovation.
Labor Productivity	Labor productivity decreased from ₹7.5 lakh per worker in 2014-15 to ₹5 lakh in 2019-20.
Raw Materials	Dependency on imports from South Korea and Japan for manufacturing materials.
Technological Dependence	Utilization of outdated technology and machinery in the domestic toy manufacturing sector.
Tax Rates	Electronic toys are taxed at 18% GST, while non-electronic toys are taxed at 12% GST.	Providing financial incentives, access to credits, along with the rationalization of tax rates.
Alternatives	Competition from low-cost imports, notably from China, which dominates about 80% of toy imports into India.	Evaluate and balance protectionist measures with initiatives boosting investment, innovation, and competitiveness.
Nature of Industry	About 90% of the market remains unorganized, hindering potential industry benefits.	Enhance skill development, financial assistance, and other support mechanisms to nurture growth within the toy industry.

Some Key Words

1. HSN Codes

   1. Product Categorization in Trade:

      1. Each product is assigned a specific HSN code (Harmonized System of Nomenclature) for identification in trade.

   2. HSN Code Utility:

      1. HSN codes are universally used in Customs and GST procedures, aiding both importers and exporters by being a mandatory detail in import/export documentation.

   3. HSN Code Structure:

      1. Consists of a six-digit identification system where:
      2. The first two digits represent the HS Chapter.
      3. The middle two digits indicate the HS Heading.
      4. The final two digits specify the HS Subheading.

   4. Classification Purpose:

      1. Facilitates a standardized classification of goods internationally.

   5. Origin and Implementation:

      1. Created by the World Customs Organization (WCO), the HSN system was implemented in 1988.

   6. India's Involvement:

      1. India joined the WCO in 1971 and utilizes the HSN system for goods classification.

   7. Global Language for Goods:

      1. Often referred to as the “universal economic language” for goods due to its widespread adoption.

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