India's toy exports have shown a positive turnaround since 2018-19, with net exports becoming favorable. From 2018-19 to 2021-22, toy exports reportedly increased from $109 million to $177 million, while imports decreased from $371 million to $110 million. The reasons behind this success are worth exploring.
One contributing factor could be the significant increase in import tariffs from 20% to 60%, accompanied by the implementation of non-tariff barriers. Another factor could be the implementation of the Make in India policy. Furthermore, it is essential to consider whether the removal of the reservation policy for labor-intensive products in 1997 played a role. Research indicates that the dereservation of toy manufacturing led to the entry of new firms in registered manufacturing and an expansion of output, albeit for a limited period.
However, the unorganized sector has maintained a larger share in output and employment within the toy manufacturing industry. The key takeaway from this experience is that promoting labor-intensive industrialization, such as toy manufacturing, can have a significant impact on the economy. In an era dominated by AI and automation, this is indeed encouraging to acknowledge.
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