India's toy box opens: Retail giants roll dice on direct sourcing

Walmart, Target have started sourcing Indian brands for the first time

4 min read Last Updated : Feb 20 2025 | 11:09 PM IST

The toy industry is no longer child’s play in India.

The country is not traditionally known for toy exports, but this financial year (2024-25) seems to be turning the tide. As part of the China Plus One policy, global retail giants like Walmart Inc and Target Corporation have, for the first time, started sourcing Indian toy brands, industry sources said.

Interestingly, Walmart plans to treble its sourcing from India to $10 billion by 2027, and the diversification into toys is seen as a step towards that goal.

This comes at a time when Finance Minister Nirmala Sitharaman, while presenting Budget 2025, announced a national action plan to make India a global hub for toy manufacturing.

Though global toy brands like Hasbro, Mattel, Spin Master, and Early Learning Centre were already engaged in contract manufacturing in India, this is the first time products from domestic players like Funskool India are in demand by global retail majors. Interestingly, Italian companies like Dream Plast, Micro Plast, and Incas International are also looking at India for contract manufacturing.

“We are strongly building our Indian brands. Now, the biggest retailers in the world, like Walmart, are coming directly to us. They have picked up large volumes of three or four of our items this financial year. This month, a team from Target in the US visited our factories. They have shown great interest. Our factory in Ranipet is much better than many of the units in Vietnam,” said K A Shabir, chief executive officer of Funskool India, owned by tyre maker MRF and Associates.

Funskool also reportedly supplies international toy majors such as Spin Master, Early Learning Centre, Flair Leisure Products, and Drumond Park Games.

According to industry players, factors that worked in favour of Indian companies include government regulations like the mandatory requirement of Bureau of Indian Standards (BIS) certification for toy sales in India and an increase in the basic Customs duty (BCD) from 20 per cent to 70 per cent.

Before the BIS regulation, India’s dependence on China for toys was 94 per cent, which has now decreased to around 60 per cent.

“The Indian toy industry is booming with government support. In the past few years, not only has our quality improved, but we are also becoming competitive in terms of packaging and pricing. Hence, companies like Walmart and Target have now started sourcing directly from Indian manufacturers rather than relying on third parties,” said Ajay Aggarwal, president of the Toy Association of India, a body representing around 6,000 toy manufacturing units in India.

To boost the industry, the government is developing clusters focused on eco-friendly and sustainable toys. Major importers of Indian toys include the US, UK, Germany, Netherlands, Denmark, and Australia, accounting for over 70 per cent of the country’s exports.

Between 2019-20 and 2023-24, India’s toy exports rose from $109 million to $152 million. At the same time, due to government measures like higher Customs duties and quality control regulations, toy imports declined from $304 million to $65 million.

Major toy exports from India include soft dolls, sports toys, building and development toys, educational toys (including board games and puzzles), musical toys, and electronic items.

According to a report by IMARC, the Indian toy industry was valued at $1.7 billion in 2023 and is expected to reach $4.4 billion by 2032, with a projected growth rate of 10.6 per cent between 2024 and 2032.

On January 1, 2021, India banned the sale of toys that were not certified by the BIS. To support the domestic industry, the government raised the BCD on toys from 20 per cent to 60 per cent in February 2020, further increasing it to 70 per cent in March 2023.