An Indian manufacturing success story is Fun Zoo Toys. The maker of "Little Ganesha" dolls and heart-shaped pillows began as a family business in 1979 and has since expanded to become one of the top producers of fluffy toys in the country.
After import levies on toys were increased from 20% to 70% over three years, till 2023, as part of Prime Minister Narendra Modi's "Made in India" initiative, sales more than doubled.
But that's only half the story; without the import of Chinese raw materials like LEDs, integrated circuits, and metallic pins, the production boom necessary to match those sales would not have been conceivable.
With his wife Santosh Gupta, Naresh Kumar Gupta operates the business close to New Delhi. "We have just introduced electronic toys, and the challenge we are facing is that mini toy motors used in that are not being made here," he explains. Making metallic pins that are fixed in place and rotate with the gears and motors is difficult in this situation.
Companies in India that produce everything from a baby's first toy to mobile phones are caught in a Catch-22 situation: the more they strive to increase output to compete with China, the more reliant they become on their northern neighbour for parts and raw materials.
According to
Import Export Data, India's imports from China were $102 billion in 2022, almost twice as much as it purchases from its next two largest markets, the US and the United Arab Emirates, put together.
Additionally, the manufacturing sector's contribution to India's GDP has decreased to roughly 13% from 16% in 2015 and remains considerably below Modi's aim of 25%, which has already been delayed three times to 2025.
The Prime Minister administration has added production-linked financial incentives for industries like electronics and automobiles along with protectionist policies. Additionally, the $24 billion in subsidies is having some success, as evidenced by the expansion of firms like Apple Inc. and Samsung Electronics Co.
Source- Economics Times
