Navigating Trump's tariffs is no child's play. Indian toymakers are losing out on orders, enquiries
K.A. Shabir, CEO of Chennai-headquartered Funskool India, said a 50 percent tariff 'would have a significant impact on Funskool's exports, as well as on overall Indian toy exports, and would stall the diversification plans that many global brands had for India'.
New Delhi: For Indian toymakers, the US is their biggest export market, accounting for a 47 percent share in total exports in FY2024-25. But existing orders have been put on hold and enquiries have dried up since Trump imposed a 50 percent tariff on Indian goods, including a 25 percent penalty for purchase of Russian oil and defence systems.
Other Indian toymakers who rely on exports to the US confirmed that the steep tariffs have made a dent. 'We export 80 percent, of which 55 percent is only to the US market,' said Amitabh Kharbanda, director of Sunlord Group, which manufactures soft toys and apparels.
'All new enquiries from the US have stopped and even the existing orders have been put on hold by our customers,' Kharbanda added.
In 2020, the Department for Promotion of Industry and Internal Trade (DPIIT) introduced 'Quality Control Order' (QCO) for domestic manufacturers and importers of toys. The Toys (Quality Control) Order, 2020, mandated that toys for children under the age of 14 adhere to quality standards and bear the Bureau of Indian Standards (BIS) stamp.
The next year, in 2021, the government hiked import duty on toys from 20 percent to 60 percent. In 2023, it was hiked further to 70 percent. This helped restrict low-quality imports from China, while elevating quality of Indian-made toys, making them more suitable for exports.
Data from the commerce ministry shows India's imports of toys declined sharply to $73.9 million in FY2024-25 from $279.3 million in FY2019-20, while exports grew from $129.6 million to $169.5 million during the same period.
As a result, the toy industry, which had a trade deficit of $150 million in FY2019-20, recorded a surplus of $95.5 million in FY2024-25.
During this period, overall toy imports from China declined by 83 percent, from $235 million in FY2019-20 to 40.3 million in FY2024-25.
However, even as government measures have restricted imports, data suggests that China is still the biggest exporter of toys to India with a 55 percent share in FY2024-25.
Shabbir Gabajiwala, president of The All-India Toy Manufacturers' Association (TAITMA), told ThePrint, 'Earlier India was a dumping ground for low-quality toys from China but after introduction of BIS and QCO, imports of readymade toys from China have reduced substantially.'
However, this might change. In the Finance Bill, 2025, the government lowered import duty from 70 percent to 20 percent on certain electronic toys with effect from 1 May, 2025. This is expected to run up the import bill in the current fiscal.
Also Read: India's oldest toy store is a lens to view Delhi's history
Pressure to cut costs & search for new markets
With Trump's tariffs acting as barriers to exports to the US, Indian manufacturers are exploring new markets, but they want the government to negotiate a trade deal soon, and also introduce incentives and subsidies for the industry to make it more competitive.
'India needs to continue negotiating for favourable tariff structures, though this is easier said than done. Toys are a discretionary, low-margin, and price-sensitive category, and every link in the supply chain is under constant pressure to reduce costs,' said Funskool's Shabir.
According to him, 'for every Rs 1 crore of revenue, the industry can generate employment for 8–10 people, most of them women'.
'Considering this, the government could explore targeted subsidies or incentives to make Indian toy manufacturing more cost-competitive globally,' he said.
For Funskool, the largest toy manufacturing company in India, exports account for 70 percent of its business, 40 percent of which comes from the US. Other Indian toymakers, meanwhile, are now relying on markets other than the US for orders.
Nidhi Agarwal, director of Afterskool Toys and Games that manufactures soft toys primarily for exports, told ThePrint, 'While the US is a big market for us, we can still make up the numbers from new markets like Australia that are showing interest.'
'Until restrictions on the US market are lifted, we are relying on markets like the UK, France, Switzerland, Denmark, and Australia that account for 45 percent of our exports,' said Kharbanda of Sunlord Group.
Imports from China still finding way into India
While the import of readymade toys from China has declined, manufacturers are still dependent on Chinese raw material, parts and machinery. 'Items like Felt which is a textile material used in stuffed toys are not readily available in India at competitive price, variety and quality,' said Agarwal of Afterskool Toys and Games.
Due to limited options, toymakers have to depend on China for Felt, which offers competitive prices and varieties, she said, adding that the Indian toy industry lacks backward integration. 'We cannot manufacture each and every raw material used in toys ourselves.'
For Funskool, dependency on China is limited to tools and machinery, since they source most of their raw materials from India. 'We are dependent on China for production-line tooling, injection moulds, automation machines, and emerging technology processes such as digital printing and prototyping,' said Funskool's Shabir.
Adding, 'While India has capable toolrooms, they lack the competitiveness and quick turnaround times that are critical for the toy industry.'
While some manufacturers are importing raw material and machinery from China, others are bypassing restrictions by importing semi-knocked down (SKD) and completely knocked down (CKD) parts. These are assembled in India without adding any value to the product.
'Importing CKD and SKD parts from China and assembling them in India to sell as a make-in-India product cannot be classified as manufacturing,' said Kartik Jain, owner of Noida-based Masoom Playmates, a manufacturer of electronic toys. Adding, 'We must not confuse assembling with manufacturing.'
According to Shabir, Funskool is not involved in CKD operations as these are generally low-cost and the value addition from sub-assembly or final assembly is minimal. Jain of Masoom Playmates added that there is a need 'for minimum import price and enhancing inspection measures to bring down illegal imports from China'.
(Edited by Amrtansh Arora)
Also Read: Modi lauds toy hub Channapatna, but more than China this town is upset with rival at home
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