Indian toy industry hit hard by imports, says study

Toy manufacturers decimated as imports from China flood the market

B S REPORTER
Chennai, 19 August

he Indian toy industry, which largely consists of small and medium enterprises (SMEs), is caught in a strange paradox it recorded double-digit growth over the last five years, and yet around 40 per cent of Indian toy companies have closed down during this period. A recent study by the Associated Chambers of Commerce and Industry (Assocham) on the Indian toy industry has stated that the Indian market is flooded with Chinese toy imports and that Indian toy manufacturers are being decimated as a result. This phenomenon could well be described as the dragon effect. The Indian toy industry is a major market for both domestic and international players, owing to low penetration (0.5 per cent) as well as growth in the size of the middle class. Indias toy industry has a meagre share of 0.51 per cent of the global market. The Indian toy market, whose size is estimated at about ~8,000 crore (as of March 2013), is expected to grow at a compound annual growth rate (CAGR) of 30 per cent by 2015. Only 20 per cent of the Indian market is served by Indian manufacturers, with the rest being accounted for by imports mainly from China and Italy, which offer wider variety at lower prices and attract children of all ages. These imports include fun games, electronic toys, board games, construction toys, stuffed toys, educational games and toy cars, said the study, titled Indian Toy Industry The Current Scenario. The study further said overall toy imports into India increased at a CAGR of 25.21 per cent between 2001 and 2012. Imports from China and Italy

SOFT SELL Stuffed toys are arranged on a parked car as a vendor waits for customers in Chennai. Nearly 40 per cent of Indian toy makers have already closed down in the last five PHOTO: REUTERS years and another 20 per cent are on the verge of collapse
The toy industry currently surged at a CAGR of 30 per cent and 38.6 per cent respectively employs a total of around three million people in the during this period. Nearly 40 per cent of organised and unorganised Indian toy makers have sectors. With robust growth already closed down in the anticipated by 2015, the Assocham last five years study expects and another 20 Only 20 per cent of the per cent are on Indian market is served employment in the industry to the verge of clo- by Indian rise to around sure, the study manufacturers, with five million by said. The toy the rest being 2015. industry in accounted for by While SMEs India is concen- imports mainly from are being pumtrated mainly China and Italy, which melled by in the small and offer wider variety at cottage sectors, lower prices and attract Chinese imports within with about children of all ages India, made-in4,000 manuIndia toys are offering tough facturers in all. The worst-hit toy clusters competition to Chinese prodare in Allahabad, Delhi, ucts in the mid- and highKanpur, Lucknow and Patna. priced segments in both About 50 per cent of the toy domestic and international units are in Delhi-NCR, 35 per markets. Industry experts also cent are in Maharashtra, and say that major global buyers the remaining 15 per cent are have slowly begun looking scattered across the country. towards India. K John Baby, chief executive officer of Funskool (India) Ltd, a joint venture between tyre major MRF and Hasbro, said that since the cost of labour is going up in China, there are clear signs that customers are now looking at India. Our only problem is manufacturing capacity. Today Chinese manufacturers are able to consolidate their production and send it to different customers in a single container in a particular country, which we are not able to, noted Baby. Funskool manufactures and supplies toys to some of the largest global toy companies, such as Hasbro, Lego, Tomy Takara, Raven-zburger, Walt Disney, Warner Bros and Nickelodeon. Funskools own brand is now competing with Chinese products in the UK market, and will soon take on the competition in the African countries.