US tariffs on China, Thailand may open door for India’s toy exports

A global shake-up in the toy trade is underway, and India may have just been dealt an unexpected advantage.

Washington has slapped an additional 27% reciprocal tariff on Indian goods, citing what it claims is an average 52% tariff on US imports into India. While this presents a fresh challenge for Indian exporters, it comes alongside a much steeper blow to China and Thailand, two of the world’s largest toy manufacturers.

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As the world’s largest toy importer, the US accounts for over 30% of global demand, with China alone supplying nearly two-thirds of it. But the latest tariff realignment threatens to weaken China’s dominance, creating an opening for emerging players like India, according to trade analysts.

While challenges remain, industry leaders see this as a chance to boost exports and strengthen India’s position in the global toy supply chain.

Under the US tariff plan, China—the primary target—now faces a 34% reciprocal tariff, on top of an earlier 20% duty, bringing the total to 54%. Meanwhile, Thailand will face a 36% tariff.

India’s toy market, valued at $1.7 billion in 2023, is projected to reach $4.4 billion by 2032, growing at a CAGR of 10.9%, according to the Indian Brand Equity Foundation (IBEF).

In FY24, India's toy exports totaled $152.34 million, slightly down from $153.89 million the previous year, according to commerce ministry data. Despite this, the US remained a key market, accounting for $250 million of India’s $648 million in toy, game, and sports exports in 2023.

"While heightened US tariffs have affected India’s overall competitiveness, tariffs on Indian toys remain lower than those on Chinese toys, giving India a relative edge," said Ronak Pol, team lead at the Foundation for Economic Development.

The US toy market heavily relies on imports, with shipments from China alone amounting to $33 billion in 2023, according to market research firm Statista. With substantial tariffs on Chinese products, US importers may increasingly look to alternative suppliers—including India.

Ajay Aggarwal, president of the Toy Association of India (TAI) and owner of Ankit Toys, sees both an opportunity and a challenge. “Earlier, toys were exported to the US without any tariff, but now our exporters will have to pay a 27% duty to send their consignments there,” he said.

"Since the duty on China and Thailand is higher than on India, it’s indeed an opportunity for us. We will sit across the board, analyze the situation, and work out a strategy to increase our trade with the US," Aggarwal added.

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However, scaling up to meet international demand remains a hurdle. Indian toy manufacturers must contend with issues related to production capacity, quality compliance, and branding. The sector has received a boost from the "Make in India" initiative, which incentivizes domestic production and restricts low-quality imports.

Despite these policy efforts, industry leaders argue that trade negotiations with the US could further enhance India’s export potential.

"India’s toy imports from the US are negligible. This creates a compelling case for a bilateral tariff reduction. Lowering US tariffs on Indian toys will not harm domestic interests but can unlock a major export opportunity," Pol added.

Even a small share of China’s lost US market could significantly boost India’s toy manufacturing ecosystem, generating jobs and strengthening domestic production, Pol further noted.

The Indian government, meanwhile, has introduced the National Action Plan for Toys, aimed at positioning the country as a global manufacturing hub. “The scheme will focus on developing clusters, skills, and a manufacturing ecosystem to create high-quality, innovative, and sustainable toys under the 'Made in India' brand,” finance minister Nirmala Sitharaman had said announcing the scheme.

Rather than a Production-Linked Incentive (PLI) scheme, the toy sector has benefited from initiatives such as the National Action Plan for Toys (NAPT), launched in 2020. This plan focuses on developing manufacturing clusters, improving workforce skills, and upgrading infrastructure to help India emerge as a major player in the global toy market.

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Additionally, the government has enforced Quality Control Orders (QCOs) to curb low-quality imports and has raised customs duties on foreign-made toys to promote local production. While there have been discussions about extending the PLI scheme to the toy industry, no formal announcement has been made yet.