Like Pakistan, India too has a national action plan.
Announced in 2020, the National Action Plan for Toys (NAPT) seeks to establish India as a global toy hub. This goal feeds off a broader recognition in New Delhi that given evolving geopolitical trends and the impact of Covid-19, global supply-chains are diversifying out of China to the rest of the world.
From semiconductors to seafood, major companies that had scaled their operations in China are now looking elsewhere. And while policymakers in Pakistan are paying attention to India’s embrace of the United States and its national security implications, they are missing that the actual action is on the economic side.
According to publicly available data, the Indian toy retail market was worth an estimated $2.2 billion in 2020, when the NAPT was announced by India’s prime minister. Building off the “self-reliance” mantra that emerged during the pandemic, the Indian government is seeking to shift the toy market away from imports — in 2020, almost 85 per cent of toys in India were imported, with China representing 80pc of the total imports. Meanwhile, the country was not competitive in terms of exports, selling a mere $200 million of toys to global markets.
To achieve the goal of making India a global hub for toy manufacturing, the NAPT identified various clusters across states — the goal being that clusters can develop shared capabilities while also creating competition across states to provide best-in-class infrastructure in an efficient manner.
Recognising that much of India’s toys industry relied on artisans and small businesses — some 4,000 micro and small businesses form the backbone of the industry in India — the plan also envisioned investments to upskill these businesses, such that they can be more productive and competitive. In addition, recognising the growing use of technology in learning, the plan also sought to promote digital and online games as part of the broader strategy.
Plans, without execution, are not worth the paper they are printed on. To ensure execution, a coordinating mechanism across the central government bureaucracy was created to deliver progress, with the prime minister’s office directly taking an interest in implementing the NAPT. Nearly two years after its announcement, the plan is beginning to have an impact — India’s toy imports have declined from $371m in 2019 to $110 million in 2022, while exports have shot up from $202m to $326m.
The strategy was quite simple — the state increased tariff and non-tariff barriers for cheap imports from China while clearly signaling to domestic and international manufacturers that the country was open for business. This signaling had a dramatic short-term impact on cutting imports as barriers are easier to erect. However, policy consistency and on-ground facilitation are needed to convince companies to invest in long-term manufacturing capacity, which is what a central government-led coordinating mechanism with direct interest from the PMO did.
There is, however, a recognition that this is only the beginning and that attracting foreign direct investment in this sector, which is critical to growing linkages with global supply-chains and improving domestic competitiveness, is key.
Rather than rest on its near-term wins, the government has now focused its energies on offering production-linked incentives (PLIs) to manufacturers. The push for a toys PLI is based on the success of the electronics sector PLI, which has seen a dramatic growth in India’s electronics manufacturing capacity, with companies like Apple making a big long-term bet on India.
Once finalised, the toys PLI is expected to give global investors further confidence in terms of the policy and incentives structure for toy manufacturing in India. Given the growing impetus to diversify their manufacturing base, global companies are likely to take advantage of the PLI, bringing higher FDI, technical capacity, and managerial talent to India.
Lesson for Pakistan
While toy manufacturing and combating terrorism are two different things, the way in which India has gone about executing the NAPT should be a learning lesson for Pakistan. Years ago, Pakistan developed a national action plan to combat terrorism. While initial progress was made, the plan over time fell by the wayside and the follow through simply was not there.
Resting on near-term wins, key stakeholders focused on other priorities, forgetting that the plan called for taking painstaking actions over the long-term to solidify the near-term gains. An example is point number four in the 2014 plan, which said that “Nacta, the anti-terrorism institution, will be strengthened.” While the Nacta was supposed to play a coordination function, various arms of the security and intelligence apparatus have balked from cooperating with it over the years.
Point number seven in the 2014 action plan focused on “ensuring against re-emergence of proscribed organisations.” Eight years later, shifting priorities and flawed policies, including the decision to negotiate with terrorist groups, has meant that the people in Swat and South Waziristan are protesting against the reemergence of terror groups.
As a result, the dark clouds of terrorism have once more gathered over the country.
Pakistan’s ruling classes, however, continue to remain engaged in a cynical game of thrones, where the quest for power has had a blinding effect.
Meanwhile, countries like India and Mexico (the latter’s strategy perhaps can be elaborated on in another article), are leveraging the shifting geopolitical sands to deliver socioeconomic gains for their society.
It won’t be too long before Pakistanis wake up and realise that they have missed another critical moment to create opportunity for the many, not just the few.
The Jodia Bazar Diaries is a weekly column by political economist Uzair Younus
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