Due to the increasing awareness of branded products and the growing popularity of action figures and cartoon characters, the demand for international brands is on the rise. International licensing of toys is an important factor in the toys industry. This has led to the increasing number of international licensed products in the country. As of 2016, 6% of traditional toys and games sales were through licensed products, although the figure can reach as high as 50% in some categories, such as action figures and accessories.
All leading toys and games specialist retailers, such as Funskool India Ltd, Reliance Retail Ltd and Simba Toys India Ltd, were expanding their presence by opening more physical stores and also by listing their products in leading e-commerce websites like amazon.in and flipkart.com. Many manufacturers are also tying up with different movies to increase the sales. For instance, Simba has taken the license for Bahubali 2 whereby they launched weapons such as swords prior to the release of the movie.
The traditional toys category is expected to grow further but it continues to be impacted by the rising number of imports from China. Many of these imports are illegal and are sold through unorganized retail at cheaper prices, thereby affecting the growth.
Small and medium toy manufacturers are struggling to survive in the industry due to the high import duty levied on the raw materials used in the manufacturing of toys. The import duty on raw materials is as high as 20%-30% compared with 5% for the import of a finished toy. As a result, finished toy imports are increasing from countries such as China, the US, and the UK, which negatively affects the growth of the local players.