Toy production in India is set to get a big push with the government actively considering the extension of the Production Linked Incentive (PLI) scheme to the sector with a proposed outlay of about ₹3,500 crore, according to sources.

“The Department for Promotion of Industry and Internal Trade has identified toys as a top sector that could benefit from the PLI scheme and is in active discussion with the Finance Ministry on the matter. The other two sectors on DPIIT’s list for eligibility for PLI benefits are bicycles and leather footwear,” a source tracking the matter told businessline.

Government incentives under the PLI scheme will likely be extended to finished toys rather than to toy parts, and only manufacturers who receive the Bureau of Indian Standards (BIS) certification for quality would be eligible.

“A lot of our toy components and raw materials are not made in the country. There are some electronic components not available in India at all. Some textile materials used in soft toys also need to be imported. Initially, the industry will have to import such components,” the official said.

BIS certification

India’s domestic toy manufacturing got a significant boost after the Centre increased import duties on toys to 60 per cent from 20 per cent in February 2020, and the DPIIT came out with a Quality Control Order (QCO) for the sector.

The order made it mandatory for all toys sold in the country, including those imported, to be certified by BIS with effect from January 2021. A total of 1,000 licences have been issued by the BIS under the QCO for toy manufacturing so far with most of the small and medium sector manufacturers going for it.

As a result, toy imports (the major varieties) declined 70 per cent to $110 million in 2021-22 from $371 million in 2018-19, while export of toys from the country increased 61.39 per cent to $326 million from $202 million in the same period, according to government figures.

Low-quality Chinese toys, which were posing a serious health hazard for children, have almost disappeared from markets in India, the source added.

Attracting big investments

“The government is hopeful that the introduction of the PLI scheme for the toy sector will help attract big investments and make the industry grow to its true potential. A number of domestic brands are already exporting to several markets and with more money and technology pumped into the sector, growth could be phenomenal,” he said.

So far, the government has announced PLI schemes for 14 sectors including automobile and auto components, electronics and IT hardware, telecom, pharmaceuticals, solar modules, metals and mining, textiles and apparel, white goods, drones, and advanced chemistry cell batteries. PLI provides incentives based on investment and turnover for manufacturers.