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What's the article about?
- It talks about India's success in transitioning from a net importer of toys to a net exporter.
Relevance:
- GS2: Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation; GS3: Effects of Liberalization on the Economy, Changes in Industrial Policy and their Effects on Industrial Growth;
- Essay;
- Prelims
Context:
- India has recently turned a net exporter of toys, during 2020-21 and 2021-22, ending decades of import dominance.
- Between 2018-19 and 2021-22, toy exports increased from $109 million (₹812 crore) to $177 million (₹1,237 crore); imports declined from $371 million (₹2,593 crore) to $110 million (₹819 crore), official data show.
- The achievement is widely credited to the ‘Make in India’ initiative launched in 2014, and related policies, official press releases claim.
- Moreover, in 2020, the Prime Minister reportedly spoke of promoting toy manufacturing, in his talk show, ‘Mann ki Baat’.
Analysis:
- Brief survey of India’s toy industry:
- India’s toy industry is minuscule. Registered factories accounted for 1% of the number of factories and enterprises, employed 20% of workers, used 63% of fixed capital, and produced 77% of the value of output.
- However, during the one and half decades between 2000 and 2016, industry output was halved in real terms (net of inflation) with job losses. Imports accounted for up to 80% of domestic sales until recently. Between 2000 and 2018-19, imports rose by nearly three times as much as exports.
- India hardly figures in the global toy trade, with its exports at a mere half-a-percentage point.
- Between 2014-19, the Indian toy industry witnessed negative productivity growth.
- Brief survey of global toy industry especially other Asian countries:
- Historically, Asia’s successful industrialising nations promoted toy exports for job creation, starting with Japan about a century ago, China since the 1980s, and currently Vietnam following in their footsteps.
- Reason for underdevelopment of India’s toy sector: Reservation policy
- Unlike other Asian countries, India followed an inward-oriented industrial policy in the Planning-era, which sheltered domestic production by providing a “double protection” — by import tariffs and reservation of the product for exclusive production in the small-scale sector.
- As a result, toy manufacturing remained stagnant, archaic and fragmented, even as imports of modern, safe, and branded toys boomed.
- In 1997, in the wake of liberal reforms, the reservation policy was abolished. Expectedly, new firms entered the organised sector, but only for a while, and productivity growth improved.
- But the unorganised sector languished with job losses, even as a majority of workers remained there.
Way forward:
- To sum up, India’s export surplus in toys during 2020-21 and 2021-22, is a welcome change. But at the same time, we need to sustain this growth in the upward trajectory by coming up with new and innovative policies.
