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India’s toy sector offers one of the compelling case of the policy-led industrial growth rooted with self-reliance and global competitiveness. Until 2010, the domestic markets was majorly dominated by low-costs imports particularly from China which had led to trade deficit and marginalization of local manufacturers and traditional artisans. This sector was characterized by the weak institutional support, limited innovation, fragmented clusters and minimum export orientation. Between 2019-20 and 2023-24, this picture drastically changed and the trajectory of the toy industry shifted decisively. Exports increased from approx. USD 109 million to USD 152 million (around 40%) while imports declined from USD 304 million to 65 million, reduction close to 80%. This reversal reflects not only market forces alone but a deliberate restructuring which is driven by state intervention, institutional coordination and regulatory reforms.
At the core, the broader political economy framework of Make in India and Atmanirbhar Bharat which redefined the industrial policies by emphasizing the domestic manufacturing capabilities, improving supply-chain, making it more customer oriented and reduced dependency on imports. The toy industry, with low capital but high employment potentials included the sharp increase in custom duty on toys from 20% to 70% which became the game changer as it immediately altered price making imports costly and favored the domestic producers. This was in conjunction with the calibrated policy shift from protectionist approach to strategic, performance-linked which combined tariff support with quality regulations, domestic capacity building and global competitiveness.
The mandatory Bureau of Indian Standards (BIS) certification addressed the long standing non-tariff barrier faced by Indian manufacturers with the prevalence of low-quality, unsafe imports which undercut the prices externalizing the safety risks. The enforcement of uniform quality standards not only improved consumer trust but forced the domestic producers to upgrade the materials and manufacturing processes. BIS norms have also aligned Indian production with international safety benchmarks strengthening export readiness.
Institutional coordination further helped, with the National Action Plan for Toys (2020), involved nearly 14 ministries and departments creating the composite sector involving design, pedagogy, culture, logistics and exports moving away from earlier fragmented approaches. This resulted into notable increase in domestic manufacturers units (which have been doubled) alongside the emergence of organize clusters with better access to finance and technology. The SFURTI (Scheme of Fund for Regeneration of Traditional Industries) also supported more than 15 toy related traditional clusters, which enabled facility centers and market linkage for artisan-based toy ecosystem. Other initiatives includes Toycathon, Toy fairs and targeted promotion through free trade agreements (FTAs) with UAE and Australia further expanding the market access. Together these measures repositioned India as stable, scalable, and skilled alternatives in global supply chain which in this decade is marked by geoeconomic fragmentation and trade realignments.
The transformation of India’s toy sector highlights the critical importance of Centre–State collaboration, where national policy direction must be complemented by strong state-level execution. The central government is playing the critical role in enabling the entrepreneurial ecosystem. State governments are best placed to identify the local clusters, MSME capabilities and can provide land and infrastructural development. By acting as the coordinators, state can align with the central incentives connecting local industrial policy, cultural assets, and employment priorities. This cooperative federalism will amalgamate traditional and modern toy industry to co-exist which making it not only a beneficiary of national policy but the model of decentralized industrial developments.
Skills, Employment, and the Future of the Toy Industry
The transformation of India’s toy sector must also be understood through the lens of labour markets and skills. Manufacturing-led growth in contemporary economies is no longer driven solely by low-cost labour; it increasingly depends on design capability, digital integration, quality assurance, and adaptive skills. The Future of Jobs Report 2025 highlights that by 2030, nearly 40% of existing skills across industries are expected to change or become outdated, with employers globally identifying skill gaps as the single largest barrier to business transformation. While the toy sector is not technology-intensive in the same way as semiconductors or AI, it is deeply affected by these broader trends.
Toy manufacturing today intersects with multiple skill domains: industrial design, child psychology, materials science, digital prototyping, logistics management, and marketing. Educational and STEM-based toys, in particular, require iterative design, compliance with international safety norms, and integration with learning outcomes. The sector therefore mirrors the broader labour-market shift identified in the WEF report, where analytical thinking, creative design, resilience, and technological literacy are among the most in-demand skills.
The toy industry therefore demands targeted incentives such as extending the Production Linked Incentive (PLI) framework to the toy industry, possibly through a capex-linked incentive model that rewards investment in testing labs, design studios, and automation suited to small-batch manufacturing. Without such measures, there is a risk that current gains remain shallow, dependent on tariff walls rather than intrinsic competitiveness. The challenge is to ensure that the sector evolves from import substitution to innovation-led export growth.
Role of Universities as the Knowledge, Culture, and Innovation Ecosystems
Universities can occupy a pivotal in India’s toy-sector transformation. Economic historians and growth theorists such as Philip Aghion and Joel Mokyr have emphasized that universities are not merely centers of credentialing, but institutions that sustain a culture of growth which is characterized by openness, experimentation, and the diffusion of ideas. In this sense, universities act as cultural incubators, bridging basic research, applied innovation, and societal needs. For the toy industry, this role is particularly critical.
First, universities can directly contribute through design and innovation. Dedicated programs in toy design, industrial design, and child-centric product development can inject creativity and research into a sector often constrained by imitation rather than originality. Collaboration between engineering institutes, design schools, and toy manufacturers can generate new product lines that combine safety, pedagogy, and aesthetics—key determinants of success in global markets. This aligns with the broader finding of the Future of Jobs Report 2025 that creative thinking and lifelong learning are rising in importance alongside technical skills, reinforcing the need for academic–industry linkages.
Second, universities can play a transformative role in revitalizing traditional toy cultures. India’s artisanal heritage—such as Channapatna toys (Karnataka), Etikoppaka bommalu (Andhra Pradesh), Kondapalli toys, and Thanjavur dolls—represents not only economic activity but cultural capital. These traditions have survived for centuries but face extinction due to market pressures and lack of innovation. Universities, particularly those with departments of design, anthropology, and cultural studies, can document techniques, introduce material and process innovations, and help artisans adapt products for contemporary and global tastes without eroding authenticity.
This synthesis of tradition and innovation serves multiple objectives. Economically, it enhances value addition and export potential. Socially, it provides sustainable livelihoods to artisan communities that form the backbone of the Indian toy ecosystem. Culturally, it strengthens India’s soft power by exporting narratives, aesthetics, and pedagogical philosophies rooted in Bharat’s civilizational history. In an era where cultural goods increasingly shape global perceptions, such integration becomes strategically significant.
Finally, universities can function as local innovation hubs, supporting incubation, testing, and entrepreneurship within toy clusters. By embedding research centers within or near manufacturing clusters, higher education institutions can reduce the distance between knowledge and production. For India’s toy sector, universities can thus become the connective tissue linking policy intent, industrial capacity, and cultural continuity.
