Carmel Giblin, CEO & president of the ICTI Ethical Toy Program, examines the potential implications for the toy market if India becomes the new manufacturing hub.
'India has been described as an economic powerhouse, and it's easy to see why'
ICTI Ethical Toy Program (IETP) recently hosted a webinar together with Invest India, the National Investment Promotion & Facilitation Agency of India, and the Asia Toy & Play Association. This webinar was in response to growing requests for support and information on the market opportunities and challenges presented by this amazing country.
On reviewing the webinar afterwards, I was reminded of childhood school reports – "Has potential, but more to do…"
It's obvious why there is so much interest from the toy industry in India, and, indeed, from all industries. The population is predicted to be 1.5b by 2024/5, of which 1b people will be under 35. This scale means India will be the largest consumer market for the next 100 years.
India has been described as an economic powerhouse and it is easy to see why, as shown in the slide above: it's the No. 1 Fastest growing G20 economy, the No. 1 Smartphone data consumer, the No. 2 Global retail index, and the No.3 Global consumer market. Companies want to serve this vast consumer market with local manufacturing, so it makes sense that toy manufacturing capacity and capability is growing there. The Indian Government is also supporting the development of local manufacturing and making it less financially attractive to import goods.
One of the challenges in achieving its potential as a major toy manufacturing country has been the infrastructure - or lack of it. However, this is changing. The Indian government will invest US$1.4t in infrastructure in the coming years, which they say will reduce logistics costs by 5-10%. Many companies are already taking steps to diversify their supply chain. Changing trade dynamics globally and, of course, Covid-19, have required companies to review the stability of their supply chain and consider how they can reduce risk. India believes it can be a new hub for toy manufacturing and a serious competitor to countries including China, Vietnam, Indonesia. The question now being asked is 'can it?'
Invest India presents a compelling sales pitch - click on each slide to find out more.
A major concern for the toy industry has been the new Toys Quality Control Order (QCO), which will become effective from the 1st of January 2021. The Indian Ministry of Commerce and Industry published details of this new requirement in February 2020. It was originally due to be effective from the 1st of September 2020. Lobbying by the industry was effective, and was received positively by the Indian Government and regulatory bodies who subsequently postponed the implementation of the order. The order affects any products intended for use in play by children under 14 years of age, and focuses on the safety of the toy. Toy safety doesn't fall within IETP's remit, but we understand concerns that this will result in duplication of testing and therefore increased costs. I know this is an issue of high importance to toy companies, and national toy associations like the Asia Toy & Play Association are available to help support companies understand the impact of the requirement and, importantly, how to comply with it.
So if India was receiving a report card as a toy manufacturing hub, it too might receive the remarks – "Clearly has potential but more to do…" I have no doubt that India will be a most diligent student, and that the Indian Government is serious about supporting the toy industry. It has a plan with 12 components, as outlined in the slide below, all designed to develop India as a serious partner for the global toy industry.
'The Indian Government is serious about supporting the toy industry'
Despite the obvious attractions of manufacturing in India, we cannot forget China or other countries such as Vietnam. China continues to dominate as the No. 1 toy manufacturing location globally. Over the decades it has earned its reputation as the home of toy manufacturing, with estimates for the percentage of toys being produced there ranging from 70-80%.
Chinese manufacturers are efficient and innovative, and know how to do business with western buyers. One of our panellists on the recent webinar highlighted two areas that Indian manufacturers needed to improve on if they were to compete effectively:
- An increased sense of urgency in resolving problems
- Growth of product development capability
These two development areas are critical to the toy industry, and China excels in both.
Aside from selecting companies based on their capabilities in design, competitiveness and so on, companies must be confident of the labour standards when selecting manufacturing partners, wherever they are in the world. Ensuring the fair treatment of workers is why IETP exists. The toy industry created IETP more than 16 years ago. Our role is to support the toy industry in delivering on its commitment to ensure workers are treated with respect, and that there there is no abuse of labour, including child or slave labour.
IETP works with more than 1,200 factories, and over 90% of these are located in Mainland China. For nearly two decades we have been working to ensure the labour standards in IETP certified factories meet international expectations, giving much needed support, helping ensure supply chain stability, and offering peace of mind to manufacturers, buyers and, most importantly, to toy consumers.
The number of IETP factories is growing in India and we look forward to supporting further growth in the future. We are committed to being where the toy industry needs us to be, and to being part of the continued growth, development and success of the global toy industry.
Carmel Giblin, CEO & president of the ICTI Ethical Toy Program
To discuss how IETP can help you source with confidence please get in touch – carmel.giblin@ethicaltoyprogram.org.
You can also learn more about the support available from the Asia Toy and Play Association (ATPA) at www.atpa.asia and Invest India, the national investment promotion & facilitation agency of India, at www.investindia.gov.in.
Readers can access a recording of the webinar: Made in India – the new game changer here and visit the IETP website to learn more about our program at www.ethicaltoyprogram.org.
