US tariffs hit Indian toy exporters as orders drop, buyers shift markets

Indian toy exporters are seeing fewer US orders after higher tariffs, forcing them to cut prices, simplify packaging and redesign products as buyers turn to cheaper markets

Indian toy exporters, who saw a strong start this financial year due to early festival shipments and advance buying by US customers, are now facing a sharp drop in new orders. The 50 per cent tariff imposed by the US has pushed many American buyers to explore other sourcing markets, forcing Indian exporters to cut prices and simplify packaging to stay competitive, according to a report by The Economic Times.

 

Industry representatives say bookings for the next festival cycle have fallen drastically. Amitabh Kharbanda, a governing body member of the Toy Association of India, said orders that usually arrive between October and November are down by around half this year, as reported by The Economic Times.

   

The US remains the biggest destination for India’s festival, carnival and entertainment articles. Exports of these items touched $64.5 million during April-August, reaching nearly 78 per cent of last year’s full-year exports for the same category.

 

Exports still up in early FY25, but challenges grow

 

Despite the slowdown emerging in the second half of the year, shipments in the first five months showed moderate growth. Exports of festive and entertainment articles rose 4 per cent year-on-year to $101.9 million, while total exports of toys, games and sports goods increased 8.9 per cent to $302.6 million in April-August, the news report said.

 

The US first levied a 25 per cent duty on Indian toy imports from August 1 and later raised it to 50 per cent from August 27, linking the decision to India’s procurement of Russian crude.   

 

Front-loaded buying boosted early growth

 

According to Funskool India CEO KA Shabir, shipments for the US festival season usually begin in April. The news report quoted him as saying that the buyers had placed orders earlier than usual due to high tariffs on Chinese toys. Early buying strengthened volumes in the first half, but once the higher tariff on Indian toys came in, fresh orders slowed, he said. Shabir expects the year to end with small single-digit growth.

 

To manage rising costs, manufacturers are reducing features, shrinking toy sizes and shifting to basic packaging. A Delhi-based exporter said customers are demanding deeper discounts, warning that failure to do so could push business toward Vietnam.