On The Shopfloor: Toy Manufacturer Playgro Toys Says Industry Needs PLI Scheme

For Prabha Devi (name changed on request), working in a factory far away from her native village in Haryana wasn’t something she had planned. What she had planned was to educate her children in schools where English was taught. Living and working in her village would have been more comfortable but to ensure that her children spoke correct English, she had to do more than just to give them a comfortable life.

“English bolna zaroori hain. Aur gaon mein kaam ata jata rehta hain, shanti hain. But behtar zindagi banane ke liye bhook zaroori hain (speaking correct English is important. In villages, sometimes you get work, sometimes you don’t. But to build a better life, drive is important,” she said. Prabha Devi works in one of the many factories on the Delhi-Rohtak highway. 

Toy manufacturer Playgro Toys India Pvt Ltd, which has a factory on the Delhi-Rohtak highway, employs many like Prabha Devi from villages in neighbouring states of Punjab and Haryana who come to cities for a better life. The manufacturing, assembling, and packaging facility is spread across over six acres. The policy push by the government to turn India into a toy manufacturing hub has resulted in a scaling up of operations for the industry on the whole. Rohit Chhabra, a director of the company, said that they are looking for land to expand. 

Fast-Growing Industry

India’s toy industry is taking steps towards becoming larger in scale from small- and medium-sized units. It is expected to grow from US $1 billion in 2019-20 to double to US $2 billion by 2024-25, according to a joint report by industry body FICCI and KPMG. “Even this space now seems too less for us. We need more space. So that’s the kind of boom in operations that has happened with the policy focus on toys,” Chhabra said. Playgro manufactures kids' toys, kids' plastic school furniture, and outdoor playground toys. Its products are available in over 20 states and Union Territories throughout India, through a chain of distributors and dealers’ network. It also supplies to various state governments for schools and child care centres. 

On a busy Friday, the six-acre facility is teeming with workers turning plastic into toys and furniture. The factory has roto-molding machines, injection moulding machines, and blow moulding machines that are used to give different shapes to molten plastic. These machines are manned by a labourer. Once the plastic has taken the required shape, it has to be cleaned, edges smoothened and packed for delivery. Several trucks are parked in the premises of the factory where the finished products would be loaded for delivery. 

The company supplies both directly to retailers as well as through e-commerce sites like Amazon and Flipkart. Apart from retailers, state governments are major buyers of the company’s toys. They also work with municipalities and local bodies to produce toys and equipment for public parks.

“Pehle hum kuch aur kaam karte the isi factory mein. Phir hume packing ke kaam mein daala. Kuch din laga sikhne mein par ab sikh gaya hoon. Agar kal koi aur kaam mein daale, to woh bhi sikh jayenge (I was doing some other job in this factory initially. Then I was put in the packing department. It took a while to learn but now I know what to do. If they put me in some other work tomorrow, I’ll learn that also,” said Raju (name changed on request) who works in the factory.

The factory has two floors and employs about 1,000 labourers and a lot of them are women. Playgro has plans to expand its operations to Madhya Pradesh. The company began operations in 2006 as an assembling unit and then progressed to become a manufacturing unit. The first factory was built in 2011 followed by another one in 2018. 

“Our domestic market is expected to grow to US $3 billion in size. India exports only about 0.5% of our toys. But our domestic market is growing at 20% CAGR (compounded annual growth rate). We expect to grow further,” said Manu Gupta, chief executive officer of Playgro as well as chairman of Toy Association of India. 

The first shift begins at 9.00 am and the factory is operational the whole day. There are about ten shifts through the day and each shift has about 80-100 workers. According to Chhabra, the number of toys made in a day depends on the kind of orders that the company has to deliver. “When there is more volume that has to be produced, more number of toys get made. But during vacation time, like at present, when schools are off, it’s a lean period. The workload is much less now,” Chhabra said.

Import Substitution

The central government has provided a concerted policy push to India’s toy industry. It increased customs duties on imported toys and mandated Bureau of Indian Standards certification for imports. The efforts have been directed towards enabling the industry to explore global markets and enhance exports. The policy push has also changed the kinds of toys that are more in demand now that are specific to Indian culture and folklore. Today’s made-in-India toys are based on Indian mythological characters like Hanuman and superheroes such as Chota Bheem.

“There was a huge void in the domestic market. So we created this segment called back-to-school supplies. Post the Centre’s push, there is a significant improvement in the ecosystem and ancillary infrastructure available to the manufacturing industry. There is a lot of skill set required to manufacture toys. From a retailer and user perspective, we are now getting toys that are more Indianised,” Gupta said. 

Thanks to the government’s efforts, the domestic toy industry’s operations have scaled up. However, in the present context, it is only capable of import substitution. The industry has only begun to meet India’s domestic demand. Between  2018-19  and 2021-22, the import of toys into India fell significantly from US $304 million to US $36 million, according to data from the Ministry of Commerce and Industry.

“Our domestic consumption is very high. I don’t think we are prepared to capture that (shifting the supply chain out of China). We have only started replacing imports with domestic production. See, 6 acres of land is also now too little for me. The cost of land is very high here. Our major investments are in land and building,” Chhabra said. 

India’s policy push toward self-reliance is hinged primarily on the growth of two industries - smartphone manufacturing and the toy industry. The government has been pushing production-linked incentive (PLI) schemes in several sectors to boost domestic production. It boosted India’s smartphone manufacturing. 

The pandemic and the resulting crisis in the Chinese economy created the possibility for manufacturers to explore options for moving their supply chains beyond China. It provided an opportunity for India to capture that space. Toy making is a labour-intensive industry, which helped increase India’s chances of filling the void. The government in a press release recently said that between 2014 and 2020 efforts towards boosting the toy industry resulted in manufacturing units doubling in number and dependence on imported inputs reduced to 12% from 33% earlier, gross sales value recorded a 10% CAGR growth, and a general increase in productivity. 

“India is also emerging as a top exporting nation due to the country's integration into the global toy value chain, along with zero-duty market access for domestically manufactured toys in countries including UAE and Australia,” the release said. 

However, for the domestic industry to rise up to the occasion and become export-ready, the government would need to announce a PLI scheme for the toy industry. 

“Without a PLI scheme in the toy industry, the investments won’t come because bigger players won’t come. If you want volumes to be large enough to export, then PLI is necessary,” said Chhabra.