Indian toy startups are gearing up to navigate the challenges posed by tariffs imposed by the United States, particularly those initiated under the Trump administration. While these tariffs present a hurdle for the Indian toy industry, valued at $2–3 billion, local manufacturers are focusing on domestic strategies and exploring alternative export markets to sustain growth.

The U.S. is a significant export market for Indian toymakers, accounting for 47% of total exports in FY2024-25. However, the imposition of a 50% tariff on Indian goods, including a 25% penalty for purchasing Russian oil and defense systems, has led to the holding of existing orders and a decline in new inquiries. K.A. Shabir, CEO of Funskool India, noted that the tariffs could significantly impact Indian toy exports and stall diversification plans.

Despite these challenges, Indian toy companies are exploring strategies to mitigate the impact of the tariffs. These include focusing on the domestic market, increasing competitiveness, and exploring joint ventures. Sourabh Jain, founder and CEO of EleFant, observes a rising demand for vocabulary and STEM-focused play sets, with parents showing a preference for locally manufactured products with improved material quality.

Several factors contribute to the optimism of Indian toy startups. The Bureau of Indian Standards' mandatory quality and safety approvals for toys sold in India since 2021 have curbed substandard imports, enhancing the quality of domestically produced toys. Moreover, the Indian government has been supportive, increasing import duties on toys to 70% in 2023 to restrict low-quality imports, mainly from China. However, the import duty has been lowered from 70% to 20% on certain electronic toys from May 1, 2025.

The Indian toy industry is also focusing on markets other than the U.S. for orders. The industry recognizes its potential to generate employment, particularly for women, and is seeking targeted subsidies and incentives to enhance its global cost-competitiveness.

The tariffs have placed India in a unique position compared to its competitors. While the U.S. has imposed an additional 26% import duty on India, other countries like Vietnam, Bangladesh, and China face higher tariffs. This has created opportunities for Indian exporters, with big toy firms exploring the possibility of setting up plants in India.

In conclusion, while the tariffs pose a challenge to Indian toy exports, the industry is proactively focusing on domestic demand, quality improvements, and alternative markets. With government support and a focus on innovation, Indian toy startups are preparing to weather the storm and capitalize on emerging opportunities.