Govt support key to make India major exporter of smart toys

No child's play is this. While toys are certainly meant for the children and for child's play, being part of the market that encompasses toy makers is certainly not child's play. Toys have been an integral part of Indian culture and heritage for more than 5000 years. While the desire to play is as unabated today as ever before, the global toy industry has come a long way. Digital and technology advancement in toys is leading to rising application of artificial intelligence, especially in STEM (Science, Technology, Engineering and Math) Toys. India can also scale up its capacities and capabilities in technology-based toy in medium to long term period with a little bit of support from the government. Speaking to Bizz Buzz exclusively, Lob Gupta, founder-director and chief executive officer (CEO), Fantacy Creations, makers of popular FunToys brand of soft toys, and former president, West Bengal Toy Association, shares his thoughts on where the Indian toys industry is heading

How big is the overall toys industry in India? At what rate is it growing?

If a recent FICCI-KPMG report is to be believed, the Indian toy market, which is currently estimated at $1 billion, has the potential to double itself by 2025 ($2 billion). India could also target a two per cent share of global exports by 2025. There is high growth potential for India in exports of plastic toys and board games in the US, EU and Middle East among other markets. According to IMARC Group, the Indian toys market reached a value of $1.23 billion in 2020. The market is expected to grow at a CAGR of 12.2 per cent during 2021-2026.

What is the share of organised and unorganized sectors in toys industry? Which sector is growing faster?

I would say that nearly 60 per cent of India's 3,500 toy manufacturers operate in the unorganised sector, from small units with sometimes as few as five employees. This means that the unorganized sector is larger in terms of number of players, but in terms of value, organised sector is much-much higher. Besides, these unorganised sector often don't have the capital and wherewithal to suddenly increase production. Therefore organised sector is growing much faster.

What is the share of India in global toys export? Is it growing? How can it grow faster?

The overall global toy market is estimated to be $95 billion. Significantly as high as 70 per cent of this sourced from China. China has predominantly been the main source market. Average amount spent per child on toys worldwide is $50-69. In India it is only $3.

Although India's toy export has come down from $239 million in 2019 to $224 million in 2020, thanks mostly to pandemic and lockdown, there is huge scope for growth, thanks to huge cost competitiveness and advantages that India has.

There is no doubt that there is high export potential in toys such as dolls made of plastic and wood. India also has the potential to be a major hub for electronic toy exports such as STEM toys, video game consoles, etc. Indian toys' overall export potential is estimated to be in the range of $0.9 million to $4.4 billion by focusing on high value toy exports to the US, EU and Middle East.

How has the pandemic impacted the soft toys industry?

Due to the lockdown and an increase in import duty on toys, supply of Chinese toys to India has reduced, said manufacturers. But at the same time, demand for toys has increased in the past three to four months because children are locked up at home and are demanding more toys. All these factors have led to about 25 per cent surge in domestic demand for toys, which we are trying to meet by scaling up production. But it will take us some time to do that.

Would dependence on China eventually come down?

Ironically, a large piece of the Indian toy market pie is taken by China as 70 per cent of India's imported toys, reportedly come from the dragon country. In February 2021, Prime Minister Narendra Modi inaugurated the country's first toy fair, with over 1000 virtual stalls, webinars by State governments, and knowledge sessions by experts, to boost the sector. He pushed the 'vocal for local toys' agenda and said that the most Indian toys are built out of natural and eco-friendly materials. India should make an effort to make minimal use of plastic in toys and use such material that can be recycled. The Prime Minister emphasised the need to increase local production of toys and increase India's share in the global toy market pegged at Rs 7 lakh crore. If things move the way it has been envisaged, dependence on China will certainly come down.

How is Funtoys growing?

Fortunately, Funtoys managed to grow even during challenging times. We have been growing steadily. Our physical retail sales and online sales both have been growing significantly, thanks to continuous ideation, innovation, designing and re-designing. Starting out of our family home at Jadavpur in South Kolkata and supported ably by my wife Bisistha Gupta and two sons, the company has now spread its wings in Orissa, Mumbai, Pune with retail presence all across the country.

What would be your thrust areas going forward?

We will continue to focus on soft toys, which is our forte and will continue to lay thrust on innovative product designing, developing characters and reach out to our customers with new and innovative products, which are safe for the kids.

What is your take on the growth prospects of AI-enabled, and other educative toys?

Tech infused future toys - artificial intelligence, 3D printing, and augmented reality especially in STEM toys are defining the future of toys. India has limited manufacturing capability in battery operated, electronic and technology-based toys. These can be scaled up.

Indian toy makers, at present, lack equipment to make electric toys. For this Indian toy makers need to import machines from South Korea and Japan and right now they are expensive to get with a 34 per cent import duty. If the government reduces the duty, we can start making electric toys as well. They have got a huge market.