Mukesh Jagwani | 14 Apr, 2020
With 26% of the population under
the age of 15 years, it’s no surprise that Indian toy industry is accelerating.
Valued at US$ 1.5 Billion in 2018, registering a CAGR of 15.9% during the year
2011- 2018. According to market research firm IMARC, the market is further
estimated to cross US$ 3.3 Billion by 2024, growing at a CAGR of 13.3% during
The estimated Rs 2-lakh-crore global toy market is dominated by China (from a
manufacturing point of view (POV) and the US is the biggest from consumption
POV), which sells close to Rs 1.4 lakh crore worth of products annually.
In India, the toy market is dominated by unbranded Chinese products with 90% of
the market being unorganised. These Chinese toys do not comply with channel,
quality or safety norms and thus turn out to be much cheaper for the Indian
consumer, whose purchase decision is heavily influenced by price.
While this is a challenge, aware and indulgent parents with higher than average
disposable incomes do opt for the 10% organised retail chains that offer
quality products at a higher price point. The market for branded toys is
growing with key players like Hamleys standing strong with 127 stores and the
US based retailer, Toys R Us growing steadily with 12 stores currently
operational across the country. Both the formats have aggressive growth plans
for 2020 and beyond. In smaller towns, where access to these stores is limited,
online e commerce players like Amazon and Flipkart are helping bridge the gap
through door-step delivery.
From traditional toys like wooden carts, whistles, unbranded plush toys and
dolls, the Indian
consumer is now transitioning to a new range of toys, heavily influenced by
Social media and global Pop culture. The demand for international brands is on
the rise and the Internationally licensed toy market in India is expected to
Even YouTube trends like ASMR, Slime, DIY and more are being interestingly
adapted into toys. Due to growing demand, toy manufactures are now focusing on
producing licensed toys around globally popular shows like Paw Patrol, Peppa
Pig, Masha and the Bear etc. Disney’s product lines from the Marvel cinematic
universe and popular animated movies like Frozen drive a considerable portion
of sales. It’s not uncommon to see small mom and pop stores selling Chinese
replicas of the Disney/ Marvel or DC line of toys due to their ever-increasing
Views on recent moves by the Indian Government
The India government has recently announced a stricter quality testing for
imported toys and also considering imposing further curbs, making toys a part
of the restricted list. It is also looking to increasing the import duty
further by 60%, over the 100% that was already increased in the earlier budgets.
While it’s a welcome move to have stricter quality control in place because it
would mean that the unbranded cheaper toys would find it difficult to make its
way into the market and branded safer toys will have a larger play. This move
could put India at part with the larger toy consuming markets like US, UK,
Canada and Australia along with other top European countries, where most of the
toys are branded and safe.
However, with import duty increase,
a measure that the government of India expects to help in local manufacturing
of toys, appears like a move coming from a lack of understanding of the
To promote local manufacturing, incentivising manufacturing would be a much
bigger invitation for international toy manufactures to set up shop in India
and export to worldwide markets, rather than making it difficult to import.
Simply because, most of the brands and entertainment properties that the toys
are based on, are owned outside of India, and at least a speciality toy store
in the organised sector like Hamleys or Toys “R” Us will continue to be
merchandised over 90% with toys into the country, as India is one of the
smallest consumption markets for branded toys globally and it would only make
commercial sense for big global toy companies to set up a manufacturing
facility for export rather than for domestic consumption.
Increasing import duties could only make branded safe toys more expensive and
turning consumers to cheaper Indian made toys which aren’t of as high quality
as international branded toys as of today.
This measure means that the small Indian toy traders and retailers, apart from
Indian corporates like Reliance who have significant play in toys will be
severely impacted. A move that would not go down well with the traders’
associations that form a large voting base for the government. In any case with
the current 20% duty, freight and tax rates, the branded toys are priced at
least 2X, if not more, as compared to locally made toys for the same box size.
So, by no means a threat to local manufacturing.
Moreover, making licensed, high quality international brands available in India
continues to be a challenge due to tough Import norms and the recent increase
in import duty. As a result, small businesses, who wish to legitimately license
and sell these products suffer, while low quality, low cost Chinese toys
continue to flood the market.
To stem this tide, it is necessary that the government takes steps to enforce
stricter laws against counterfeit toys and enforce a ban on low quality Chinese
products that are a safety hazard.
The author is the CEO of
Winmagictoys Pvt. Ltd. and has a vast knowledge of the global toy industry.