Context:

India has recently turned a net exporter of toys, during 2020-21 and 2021-22, ending decades of import dominance. 

Concerns:

• India’s export surplus in toys during 2020-21 and 2021-22, is a welcome change. However, it seems to be driven by a rise in protectionism, and the exceptional circumstances of the COVID-19 pandemic. 
• The turnaround does not seem to be the outcome of strengthening domestic investment and production on a sustained basis. 

India’s steps towards toy industries:

• Historically, Asia’s successful industrializing nations promoted toy exports for job creation, starting with Japan about a century ago.
• China since the 1980s, and currently Vietnam following in their footsteps.

Planning-era:

• India followed an inward-oriented industrial policy, with the “reservation policy”, in which toy manufacturing remained stagnant, archaic and fragmented, even as imports of modern, safe, and branded toys boomed. 

During LPG reforms:

• In 1997, in the wake of liberal reforms, the reservation policy was abolished.
• Expectedly, new firms entered the organized sector, but only for a while, and productivity growth improved. 
• But the unorganized sector languished with job losses, even as a majority of workers remained there.

During ‘Make in India’ initiative:

• Despite early positive trends, industry de-reservation failed to sustain output, investment, and productivity growth. 
• Contrary to popular perception ‘Make in India’ had a negligible effect in strengthening toy production and exports on a sustained basis.

Too premature to claim success:

• The potential for sustaining net exports appears slim as the industry has hardly made sustained investment to boost output and exports.

Conclusion:

• The study highlights that the industry’s performance is not significantly influenced by the reservation policy during the Planning era or its abolition after liberal reforms. 
• It suggests the importance of considering industrial locations and clusters and tailoring policies and institutions accordingly, rather than relying on simplistic planning versus reforms perspectives

News Source: The Hindu

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