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Behavioural interventions for an Atmanirbhar toy industry

  • Policy interventions by the government to strengthen the domestic toy industry would work best when measures to change consumer preferences are also taken.
  • These could be aimed at aspects such as raising consciousness about the economic benefits of buying locally-manufactured goods and reducing cost-anxieties about them.

The growth of India’s toy industry has been jeopardized for more than a decade by a deluge of Chinese imports. Recently, the government increased the import duty on toys by 200% and made toy quality certification mandatory in order to revive the indigenous industry. However, high import prices may not shift demand towards local toys unless a re-orientation of preferences of Indian consumers habituated to Chinese toys takes place. With the covid-19 crisis triggering a re-consideration of our beliefs towards globalization, never before has this re-orientation become as relevant as it has in 2020.

Behavioural sciences research suggests that policy interventions best alter people’s habits when supportive changes are naturally occurring in their environment. In a covid-19 world, consumer habits are witnessing a shift in their choice architecture towards safer and quality products. The government has taken due cognizance of this shift by giving a clarion call to “Go-Local". The toy market is no exception to this trend. This is where the role of behavioral economics becomes salient in bridging the intent-outcome gap towards development of an Atmanirbhar toy industry.

The first intervention should be to establish a new norm of purchasing safe and good quality Made-in-India toys as against cheap and poor quality imported toys. The government may embed this message in the branding of Made-in-India toys and popularize dedicated toy stores with region-wise brand logos. Adverts may be designed to target children and parents as influencers in building Made-in-India brand loyalty as Amul and Maggi have done in their marketing campaigns. Schools may observe a ‘Safe Made-in-India Toy Day’ and further strengthen the norm by procuring local toys from manufacturers under various educational schemes of the government.

Secondly, make it easy to manufacture, sell and buy Made-in-India toys. Uniform import duties and goods and services tax rates across product categories without classification ambiguities will help toy manufacturers. An easy-to-read trade guide on the toy industry, consolidating all incentives offered by the government along the supply chain, will be further helpful. Consumers will also find it easier to purchase Made-in-India toys when these are placed at eye level and in attractive corners in shops, emporiums, local bazaars, fairs, zoos and museums, among others. Consumers will be further enthused seeing local cultural ethos embedded in product design and packaging of toys. Ed-tech startups, for example, can embed Indian temple architecture in building block sets, Chatrunga in chess game sets, Pachesi in ludo game sets and Amar-Chitra Katha and Panchatantra themes in general merchandize.

Evidence suggests that ethnocentric consumer preferences are stronger during the youth period. Thus, at this stage, it becomes necessary to repeatedly reinforce messages to re-direct youth choices towards Made-in-India toys. Messages invoking country-of-origin effects, such as, “Every 1 Rupee purchase of Made-in-India toy provides employment to 5 Indian youths", can be reinforced on billboards, online retail outlets, shops and other public places. Personalized messages may be sent to consumers thanking them for purchasing a Made-in-India toy and showing them photographs of craftsmen who will benefit from a repeat purchase.

The toy market is characterized by wide-ranging product differentiation and more so when Chinese imports are pitted against Indian toys. Product differentiation can be re-aligned in India’s favor when positive evaluation reports and customer reviews of Made-in-India toys are disclosed and popularized to generate online and off-line word-of-mouth. Further, awards for safe and sustainable traditional toys may be instituted to encourage local producers.

Finally, consumer’s loss aversion of missing out on low-priced imported toys can be reduced by offering a safe and sustainable Made-in-India alternative such as wooden educational Chennapatna toys revived by NGO Maaya Organic, and traditional board games like 'Chausar' and 'pallankuzhi promoted by Sutradhar. These alternatives emphasize the concept of circular economy in contrast to the linear economy of “make, use, and dispose" that characterize low-cost imports. This is demonstrated by the Quality Council of India December 2019 survey, which found that 67% of imported toys are dangerous for kids.

Behavioral tools are, therefore, critical in building a new indigenous toy story in a post-covid Atmanirbhar Bharat. Adam Smith, in his 1759 book Theory of Moral Sentiments, noted, “For these lovers of toys, it is not so much the utility, as the aptness of the machines which are fitted to promote it". Let’s not miss this bus, for children can hardly wait for their little machines.

The authors are, respectively, assistant director and deputy director in the department of economic affairs, ministry of finance.

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