India eyes a global play after changing China's toy story at home

India spent years watching Chinese toys dominate its shelves. Now it wants Indian toys on shelves abroad. Higher import duties, tougher safety standards and government support have helped Indian manufacturers claw back a share of India’s toy market, where cheap imports, particularly from China, once held a dominant position.

India now wants to turn that domestic manufacturing success into a global export story. The government has identified ten focus countries, including the US, UK, Poland and Australia, and product categories such as dolls, wheeled toys, video-game consoles and games with screens as it targets a 5% share of the global toy market by 2032, up from less than 1% now, according to The Economic Times.

ALSO READ | FM Sitharaman exhorts toymakers to aim for a fourth of global market share

Finance Minister Nirmala Sitharaman has gone further, urging Indian toymakers to aim for a quarter of the global market. Sitharaman said on July 7 that toy imports had fallen 71% between FY19 and FY26, while exports reached $186 million in FY26, with Indian toys being shipped to 153 countries.

ALSO READ | Digital content is driving demand for physical toys in India, says Mattel

Separately, data shared by Minister of State for Commerce and Industry Jitin Prasada in the Lok Sabha on July 28 showed that exports across the broader HSN 9503, 9504 and 9505 categories, covering toys, games, video-game equipment and festive or entertainment articles, rose 89.1% from $203.5 million in FY19 to $384.7 million in FY26.

Imports in these broader categories fell 37.5%, from $371.7 million to $232.3 million.

The broader government data available on the Press Information Bureau (PIB) shows the direction of travel. Across these categories, India moved from a $213 million trade deficit in FY18 to a $152 million surplus in FY26.

ALSO READ | India targets 5% global toy share

The policy shock that changed the market

For years, Indian toy manufacturers struggled to compete with inexpensive imported toys, particularly from China. Manufacturing locally could often cost more than importing a finished product.

That equation began changing after the government raised the basic customs duty on toys (HS Code-9503) from 20% to 60% in February 2020 and then to 70% in 2023, as per the PIB.

The Toys Quality Control Order, issued in 2020 and implemented from January 1, 2021, also made Bureau of Indian Standards certification compulsory for toys sold in India.

A government mystery-shopping exercise in 2019 found that only 33% of toys available in the domestic market met prescribed BIS norms. By 2025, a BIS survey found that 95% of samples conformed to the required standards.

“The biggest change has been the creation of a more structured domestic manufacturing ecosystem,” said Karan Narang, Director of KV Toys India Limited, speaking to Economic Times (Online).

Earlier, importing from China was often significantly more economical than manufacturing in India, Narang said. Higher duties, quality standards and greater investment by Indian manufacturers in tooling, product development and manufacturing have since narrowed that gap.

Anand Ramanathan, Partner and Consumer Industry Leader at Deloitte South Asia, said the shift went beyond simply making imported toys more expensive.

“India’s toy manufacturing ecosystem shifted from being squeezed by low-cost imported finished toys to operating in a market that rewarded formal, compliant and locally manufactured products,” Ramanathan said.

The government has also built a broader support structure through the National Action Plan for Toys, Toycathon, toy clusters, export incentives and trade agreements.

The ecosystem now comprises more than 21,000 toy MSMEs, over 770 DPIIT-recognised toy startups, nearly 50 toy clusters and more than 1,800 BIS licence holders, according to the government's July roadmap, said Ramanathan.

At the Toy Biz International B2B Exhibition in Delhi from July 4-7, 400 Indian toy brands met around 100 international buyers from 40 countries, with nearly 30,000 business visitors attending


A larger domestic manufacturing base, however, is not the same as a globally competitive export industry.

India can make toys. Can it make them on a global scale

According to Deloitte's assessment shared by Ramanathan, India's toy and games production value stood at $728 million in 2024, while exports were $169 million, equivalent to 17.3% of production.

India ranked sixth in Asia-Pacific by production value but 14th by the share of production exported.

“The core constraint is not basic production capacity alone, but the weak conversion of production into export-scale, buyer-ready supply,” Ramanathan said.

The industry remains highly fragmented. Deloitte's assessment puts the number of companies at 15,097, with the five largest accounting for just 8.5% of production value.

That fragmentation limits manufacturers' ability to invest in international testing, certifications, tooling, automation, packaging and overseas distribution. Ramanathan said profitability was only 2.7% of production value in 2024, while B2B costs represented 94.1% of total expenditure.

Narang sees scale as the industry's biggest structural weakness.

“Scale is the biggest advantage China has,” he said.

Chinese toy clusters bring mould makers, plastic processors, electronics suppliers, packaging companies, decorators, assemblers and logistics providers into close proximity, allowing faster tooling and product development, lower logistics costs and greater flexibility.

“India's biggest opportunity is to replicate this ecosystem effect, rather than simply adding individual factories,” Narang said.

Ramanathan similarly identifies ecosystem scale as India's biggest competitiveness gap with China. He said China still accounts for roughly 70-75% of global toy exports, while India remains below 1% of global toy trade.


China is still inside India's toy supply chain

India's success in replacing Chinese finished toys should not be mistaken for complete supply-chain independence.

Narang said Indian manufacturers continue to depend on China for electronic components, motors and electronic assemblies, specialised raw materials, moulds and tooling, certain machinery, components and accessories and specialised technologies.

“India has reduced dependence considerably at the finished-toy level, but dependence continues in several upstream areas,” Narang said.

Ramanathan said the next localisation challenge is therefore not simply making finished toys domestically, but building capabilities in precision plastics, electronic parts, batteries, sensors, mould-making, mechanical assemblies, testing systems and toy-grade manufacturing equipment.

India has factories. It needs brands

Even if India solves its scale problem, another weakness remains: intellectual property (IP).

The world's biggest toy businesses derive value not simply from manufacturing physical products but from owning characters, stories, franchises and consumer relationships.

“Manufacturing and brand building require very different capabilities,” Narang said.

Indian companies have historically focused more heavily on manufacturing and distribution, while global toy companies have invested in character IP, storytelling, licensing, design and consumer marketing.

The industry therefore needs to move from Made in India to Designed in India to Owned in India, Narang said.

“A large part of the industry continues to operate around OEM/private-label manufacturing because that provides relatively predictable volumes,” he said.

“India has improved its ‘make’ capability, but the next leap requires moving into ‘design, own and monetise’ capability through original Indian IP, STEM-led products, character franchises, digital play experiences and exportable brand platforms,” Ramanathan said.

The toy itself is changing

The challenge is becoming more complex as toys increasingly intersect with digital entertainment.

Sanjay Luthra, global chief commercial officer of Mattel, told ET in July that digital content is increasingly driving demand for physical toys rather than replacing them.

For Mattel, India is becoming both a consumer market and a manufacturing base.

“India is one of the key supply chain hubs for Mattel,” Luthra said. “Whatever we manufacture here, we also take to the rest of the world.”

Ramanathan said international buyers are increasingly looking for STEM toys, NFC-enabled products, colour-changing toys, augmented reality, AI, robotics and app-enabled educational products.

That means Indian manufacturers will need capabilities in electronics, software, design and storytelling alongside traditional manufacturing.

China-plus-one is an opportunity, not a guarantee

Global companies are increasingly looking to diversify supply chains, giving India an opportunity to become a China-plus-one manufacturing destination.

But interest may not automatically translate into large orders.

“Global buyers today are looking for much more than simply a competitive (Free on Board) FOB price,” Narang said.

They increasingly expect consistent quality, international safety certifications, traceability, ethical manufacturing, social compliance, product innovation, reliable capacity, shorter lead times and competitive pricing.

Ramanathan said India is becoming more relevant in global sourcing diversification, but remains an emerging alternative rather than a replacement for China.

For the industry, Narang's priorities are straightforward:

“Manufacturing — Build scale and ecosystems,” he said.

“Design & IP — Move up the value chain,” he said.

“Exports — Build global market access.”

India has already shown that it can cut its dependence on imported finished toys. The harder question is whether it can turn that manufacturing base into a global toy ecosystem.