Tariff cut puts Indian toys, games back in game in US: How it's faring

Renewed interest from US, EU and UK buyers after tariff cuts is positioning India as a key sourcing hub for global toy majors ahead of the Autumn-Winter 2026 season

In the final week of January, Nuremberg (January 27–31) was a dream destination for any child. The German city was decked out in creative hues showcasing the latest developments in children’s play at the Nuremberg International Toy Fair — the world’s largest marketplace for toys and games.

 

While new-age electronic toys and games stole the spotlight, global majors were busy sealing sourcing deals. Amid this, European sourcing giants showed growing interest in partnering around 50 Indian firms, buoyed up by optimism surrounding the proposed European Union (EU) and UK free trade agreements.

 

American buyers, however, remained cautious due to concerns over higher tariff burdens on India. That mood appears to have shifted within a week following the US tariff cut announced this week. Companies with huge exposure to the US market are now turning to India as a key sourcing hub for the autumn–winter 2026 season. These orders had earlier been stalled due to additional tariffs.

 

Global toy majors such as Canada’s Spin Master, US-based Hasbro and Learning Resources, Australia’s Moose, the UK’s Casdon, Germany’s Ravensburger, Europe’s Airfix, and US brand Melissa & Doug are setting their sights on India for aggressive sourcing. Manufacturers, including Italian firms Dream Plast, Microplast, and Incas, are also gradually shifting focus to India as part of the China+1 strategy. Industry leaders expect Indian manufacturers to be showstoppers at the upcoming New York City Toy Fair (February 14–17), now that the tariff cut is in place.

 

“At Nuremberg, we saw renewed and growing interest from EU and UK buyers in sourcing from India. The announcement of the India–EU bilateral trade agreement came while we were in discussions with a key European customer and was positively received by our European and UK partners, who expressed strong optimism about its potential impact,” said K A Shabir, chief executive officer of Funskool India, owned by tyre maker MRF Associates.

 

“At the fair, US companies were cautiously optimistic but restrained due to tariff uncertainties. With the recent reduction in tariffs, we now expect a clear revival of interest from US buyers in sourcing from India,” Shabir added. He said that an Australian customer with exposure to the US market has already resumed discussions on autumn–winter 2026 projects that had earlier been stalled due to US penal tariffs.

 

For Funskool, exports performed strongly in the first six months of the year, growing by around 20 per cent year-on-year. However, after the imposition of a 50 per cent US tariff, several customers paused orders or shifted volumes to Vietnam and Indonesia. The tariff cut now gives India an edge over these countries as well.

 

“Around 60 per cent of sales happen in the autumn–winter season. Last year, all companies offered discounts to US clients due to tariffs, and buyers had kept autumn-winter 2026 projects on hold. Clarity on the rates could bring back orders for the coming season,” said Amitabh Kharbanda, director of Noida-based Sunlord Group.

 

Kharbanda said his company also saw rising interest at the Nuremberg fair. “In toys, there are no spot deals. Interested customers typically visit factories and place orders later due to safety regulations. We are seeing a positive response from US buyers after the tariff cut. However, until the rules are formally in place, we will have to wait,” he added.

 

This renewed interest comes at a time when India’s total exports in toys, games, and sports equipment stood at $571 million in 2024–25, of which toys accounted for $169 million — nearly double the $65 million recorded in 2015–16.

 

Industry experts say that even a 5 per cent diversification away from China would be huge for Indian toy manufacturers, given that China’s toy exports to the US are valued at $16 billion. Moreover, the current US tariff on toys from China is around 20 per cent, compared with a proposed 18 per cent rate on toys from India. “That leaves only a 2 per cent differential in the US market and a 4.7 per cent gap in the EU market, versus China,” an industry expert said.

 

The reduction in US tariffs will provide a level playing field in landed costs compared with major Southeast Asian toy manufacturing countries. “This will make India more competitive and is likely to strengthen the China_1 sourcing strategy, with India emerging as a preferred alternative manufacturing base. However, while India has made strong progress in traditional toy categories, our manufacturing capabilities in high-end segments such as electronic toys, diecast products, and premium interactive dolls are still evolving,” Shabir added.

 

However, the toy and character market in India is not one-dimensional, with its reach now extending into categories such as personal care. One example is a deal announced this week between Mumbai-based KT Kids and Hasbro for the globally popular character Peppa Pig, marking one of the largest character-led launches in India’s children’s haircare and skincare segment. “The new trade agreements are a big positive for Indian brands. With easier access to the US, EU, and UK, India is becoming a serious sourcing base for global players like Hasbro. For KT Kids and our Peppa Pig partnership, this means faster expansion, better margins, and the opportunity to take homegrown innovation to shelves worldwide,” said Dhruv Sayani, founder of KT Kids.