India's Toy Story - Dark horse of India's Growth Story?

📍 Indian toy industry, fastest growing globally in the space and expected to reach $3 Bn by 2028 (CAGR - 12%)

📍PM Modi during one of his Mann ki Baat, appreciated this surge in growth of exports from 300 crore to 2600 cr exports recently.

📍Despite this, China's toy sector is 200 times of India. This turnaround in our exports is seen after the Covid-19 crisis and hence the sustainability of this turnaround is yet to be seen.

📍Our rapid decline in Imports can be credited to the rise in customs duty over years from 20% to 70% recently in Budget 2023. 

📍India's Toy Sector -

 25-30% - Outdoor and Sport's Toys

 15-20% - Pre School Toys

 10-15% - Dolls 

 10-15% - Games and Puzzles

📍Policy Measures by Governments - 

 - Toys Quality Control Order -> to enhance standardization in toy production.

- NAPT (National Action Plan for Toys) -> to promote local toys and values of traditional toys.

- SFURTI -> assistance in getting latest technology.

- Vocal for Local. 

- 100% FDI permitted for Toys Sector

📍 Growth Drivers 

- Huge Consumer Base and Demographic Age

- Rising Disposable Income

- Innovation in Toys (STEM Based Toys)

- Rise in penetration and online purchases

📍Top Companies -

- Brainsmith, Buddyz, Clever Cubes, Funcorp, Story Merchants, WinMagic, Varnam Craft collective and more. 

📍Challenges -

- Although the Import duty is very high, it is not a sustainable solution to curb imports. We need to be as competitive in cost and quality of Chinese toys. This can even improve our exports.

- Innovation and leveraging the latest technology to improve the value and quality of goods produced.

- Indian toy sector is still very fragmented, and hence supply chain and distribution will play an important role.

- Dependence on foreign countries for raw materials.

 📌Although the sector has shown exponential growth, we still need to see how it pans out in coming years. With very little organized players in the sector, it is difficult on betting on huge capex to sustainably improve our exports and match China at cost. 

📌 Currently, 90% toys sold in India are imported, hence with rise in import duties, can show positive momentum for Indian toy sector. Interesting to see if this sector gets sustained FDI, we might see some publicly listed companies soon. 

Source - Invest India, India Brand Equity Foundation