Toys are fun. But Indian toy makers for long have faced the heat due to imports and infiltrations from China. To bring back joy to local players, the government in the recent budget increased import duties creating a favourable environment to domestic manufacturers.
Indian toy market size stands at an estimated value of USD 1.5 billion and it is projected to grow at CAGR of 12 per cent between 2022-28. The market is expected to reach USD 3 billion by 2028 and is among the fastest growing globally. “Earlier the Indian market was filled with imported products. But now things are changing and domestic manufacturers are coming to the fore. With an intent to shift operations from China, many international companies have started to source from India and we see increased investments happening in the industry,” pointed R Jeswant, CEO, Funskool India Pvt Ltd.
Steady rise…
Understanding the potential of the industry, the centre had made a decisive step to make the country self-sufficient in toy manufacturing. The import duty that rose from 20 per cent to 60 per cent and then to 70 per cent almost curbed impots. Toys import fell by 70 per cent in the past three years, from USD 371 million in FY19 to USD 110 million in FY22. Until then exports were on a steady increase by 61.38 per cent, from USD 202 million in FY19 to USD 326 million in FY22, as per the Commerce Ministry.
“The trends in the industry are very positive. The Bureau of Indian Standards released a Quality Control Order which lays out stringent guidelines for product quality. This helped curb cheap imports and also raise the standard of the Indian industry,” explained Jeswant.
Expansion mode on…
Funskool India started off as a joint venture with Hasbro and MRF & Associates and began commercial production in 1987. Today it is 100 per cent owned by MRF & Associates. In the initial days, the company was manufacturing and selling mostly Hasbro products in India. But today, apart from the contract manufacturing toys, Funskool’s in house brands are quite popular across the world.
To keep pace with the vibrant domestic market and also international markets, Funskool is in the process of expanding all its manufacturing facilities. It has 2 plants in Ranipet and 1 in Goa. “Our current focus is on automation to increase our factory’s performance. We are also expanding our facilities and after this, all three facilities together we will have more than 200,000 sq. ft of space. This will help us to serve both international clients and the local market,” highlighted Jeswant. Funskool currently operates in 30 overseas markets and by the end of this financial year is expecting to expand presence to 45 markets. The worldwide toy market is estimated to be about USD 100 billion and India’s share is just about 0.5 per cent while China is estimated to be more than 65 per cent. This provides a huge opportunity to grow.
Toy stores have created awareness…
Funskool’s in house brand Giggles targeted at infants and preschoolers is the biggest segment and the Fundough which is a playdough is the major in the segment. “We develop games in two ways. One is through royalty arrangements with the game owners. Then we have an in-house team which works on developing and introducing new games and toys into the market,” said Jeswant. But selling toys is no child’s play. Yet Funskool has cracked the code and they have grown 60 per cent over the previous year and expect to grow by about 30 per cent this year. Toys have become an integral parts of children’s early years. Urbanisation and higher disposable incomes have helped in people wanting to buy new toys quite often. Modern retail stores, hypermarkets and toy specific stores have also fuelled this growth by increasing consumer awareness.
Need for toy design courses
For long India lacked in education and training specific to the industry but Jeswant pointed to many institutes that are offering toy design as an elective. “These are all good signs and this infrastructure will help the industry grow in leaps and bounds.” The increased export is also helping the industry gain exposure and experience.
“We have a saying in the toy industry – children are growing older, younger. This means that kids are going away from toys sooner. We don’t see that as a worry in the near future in India,” optimistically said Jaswant. The country has just scratched the surface in terms of toys consumption. There is a huge potential as the major demography of the country is young. Seeing this, even international brands are eyeing India as the next major market as the industry growth is slowing down in developed markets.
“India will continue to grow next 20 year at a double digit CAGR and with the push for indigenisation, the Indian manufacturer has much to benefit from,” said Jeswant as he signed off.
