Priced at half that of their imported counterparts, the Indian toy doesn’t just match but “rivals the foreign brands feature-for-feature”, exclaim the Shettys. The kids, who got to add to their treasure trove of mostly imported dart blasters, are happy too. That is the sweet spot that India’s reviving toy industry has captured, and in a rather quick time too.
In just four years, India has cut toy imports from China, a nation that has long dominated the global market, by an impressive 80%. A mix of high tariffs and stringent quality checks helped. Between FY20 and FY24, India sharply increased customs duty — from 20% to 70%. It also enforced the Quality Control Order (QCO), a regulation mandating stringent safety standards for all toys, whether domestically produced or imported. Result: In FY20, India had imported Chinese toys worth $235 million, a figure that plunged to just $41 million by FY24. It has also evolved into a net exporter of toys.
Manufacturers are leveraging India’s demographic edge, with the country accounting for nearly one-fourth of the world’s population under 14. The question is simple. Can India’s toy industry keep the good times playing?
LEVEL ONE
Domestic players stepped up to bridge the gap left in the wake of the restrictions, but there are levels to this. For the industry to rise up further, it has to learn new tricks — it has to rise to meet the growing demand for premium-quality toys, whilst carving out a more significant play globally.First, some numbers. India’s share of the global toy export market stood at a mere 0.3% in 2022, compared to China’s staggering 80%. India’s toy industry is valued at an estimated $3 billion, a mere sliver of the $108 billion global market. A concerted government push to bolster the domestic toy industry has led to a notable surge in exports, climbing from $40 million in 2014-15 to $152 million in 2023-24. However, exports have plateaued in the past two years, dipping from a peak of $177 million in 2021-22. Currently, India’s share of global toy exports lingers below 0.5%. This at a time when international giants like Mattel, Hasbro, and Lego are actively scouting for alternative sourcing hubs.Ajay Srivastava, founder of New Delhi-based trade think-tank GTRI, points out the reason for the scaling problem. “Much of India’s local toy production remains outdated, operating with decades-old methods,” he says. Add to that the need for scale.
Both these are issues that the industry is keen on changing. Vijendra Babu, M a n a g i n g Director of Micro Plastics, says that, “Indian toy manufacturers are now making investments into new infrastructure, enhancing expertise, and scaling operations to meet evolving market demands.” Delhi-headquartered Playgro Toys, a specialist in preschool toys and play items, operates only in the domestic market, and ranks among the top five Indian toy companies by revenue, alongside Microplastics, Aequs, Funskool, and OK Play Toys.
Manu Gupta, chairman of Playgro Toys, highlights advancements ranging from improved safety and quality standards, to product innovation, process engineering, and enhanced graphic communication, to point out how things are changing.
These strides, he says, have significantly driven import substitution, especially in the mechanical and manual toy segments. “The electronic toy segment, however, remains a problem,” Gupta admits, attributing the challenge to India’s reliance on China for critical components at globally competitive prices. As chairman of the Toy Association of India, Gupta is optimistic about the sector’s trajectory, especially considering companies are actively expanding capacity.
His own company is setting up one of India’s largest toy manufacturing facilities in Ujjain, Madhya Pradesh, to go with existing plants in Haryana and the NCR. Aequs, a Belagavi-based contract manufacturer for global brands, is establishing a sprawling 400-acre toy manufacturing cluster in Koppal, north Karnataka. The company already serves Hasbro, Spin Master, and Chicco.
THE PREMIUM GAME
But then scale is only one part of the problem. On the domestic front there remains a noticeable gap in the availability of premium toys and games, such as animatronic toys, high-end collectibles, strategy board games, and intricately designed action figures with advanced articulation, says Nilay Verma, Hasbro’s country manager for India. “It is important to be able to provide the Indian consumer with an array of choice in high quality toys,” Verma emphasizes, noting that not all products can be manufactured locally. “A portion of our toys and games therefore have to be imported from manufacturing locations outside India to fulfill consumer demand and drive further growth for the local toy market,” he explains.
A GTRI report published in May reveals that electronic toys dominate global trade, generating approximately $15 billion — the highest among all categories. This is followed by action figures and dolls at $12 billion, and construction toys at $10 billion.
The report underscores a critical recommendation: “India needs to make a separate strategy for each group.” To make that happen, India must also innovate and needs to catch up with the latest trends in the toy industry. Jayant Dasgupta, former Indian Ambassador to the World Trade Organization (WTO), emphasises that it’s time for India’s toy sector to embrace modernisation and innovation.
“The market for highvalue toys, especially electronic ones, is set to grow due to rapid urbanisation and the decline of outdoor play. However, for this growth to materialise, India’s toy industry must evolve and become far more innovative,” he asserts. Philip Royappan, General Manager at Funskool, points to a critical gap in making things happen: the scarcity of trained toy designers capable of crafting globally c o m p e t i t ive d e s i g n s .
“Unlike the established markets, India is still buildi n g its ecosystem of professional toy des i g n e r s a n d developers,” Royappan explains. “Toymaking is not yet considered a mainstream career option in India.” He underlines that the success of the toy industry hinges on three essential pillars: quality, novelty, and competitive pricing. Funskool, a prominent name in the domestic toy landscape, is backed by Chennaib a s e d M R F G r o u p, b e t t e r k n o w n f o r i t s leaders h i p i n the tyre industry. TOYING WITH IDEAS The government is taking note.
At a workshop organised in June, Rajesh Kumar Singh, Secretary, Department for Promotion of Industry and Internal Trade (DPIIT), described toys as one of India’s “champion sectors”, envisioning a long-term strategy to establish a global market for made in India toys. Key government initiatives include integrating toys as learning resources, hosting regular hackathons and grand challenges for toy design and manufacturing, and fostering indigenous toy clusters. They are also exploring reaching international consumers through online platforms. But there are even more unique possibilities.
The government has placed a strong emphasis on promoting made-in-India toys, with designs rooted in “Indian values, culture, and history”, as highlighted in a Rajya Sabha reply earlier this February. Afterall, India boasts a 5,000-year legacy in toy-making, with excavations at Harappa and Mohenjo-Daro revealing ancient creations like miniature carts and the iconic dancing girl figurine. This rich tradition continues through crafts such as the Nirmal wooden toys of Telangana’s Adilabad district, the intricate betel nut toys crafted by select families in Rewa, Madhya Pradesh, the vibrant Channapatna toys of Karnataka, and Kathakali dance dolls of Kerala, among others. These traditional toys command a premium, and India needs to market them better.
At this juncture, India’s nascent toy industry is seeking extended government support to navigate its growing challenges. A key demand is the resolution of an anomaly in the Goods and Services Tax (GST) structure. Gupta of Playgro Toys highlights the issue, explaining that toys with minor electronic components — such as lights in dollhouses or music in playsets — are taxed at 18%, making it challenging for manufacturers to offer such advanced products at competitive prices. Industry players are urging the government to harmonise GST for these toys in the 12% bracket currently applied to mechanical and manual toys, fostering affordability and innovation.
“India’s toy exports have the potential to reach $1 billion from the current $150 million in just a few years if Indian manufacturers are incentivised with the PLI scheme, and global brands are encouraged to source from India through a preferential customs duty scheme,” says Aravind Melligeri, Chairman of Aequs. Production-Linked Incentive (PLI) is a scheme that offers companies cash incentives on incremental sales of products manufactured in India.
GAME ON
For the industry, there’s an undeniable elephant in the room: the ever-growing competition from mobile phones. Like their global counterparts, Indian toy makers recognise this as a significant challenge. In response, toy companies are increasingly focusing on in-store demonstrations to educate parents about the developmental benefits of toys over mobile devices. As Gupta puts it, “A mobile is just a handheld device. But playing with toys enhances a child’s physical dexterity.” Dexterity is something India’s toy industry could do more with.
