Accessing the Indian Toy Market

By Daniele Caroli

India offers great potential for the toy sector, but regulations and tariffs hinder imports. The Asia Toy & Play Association (ATPA) outlined the procedures to follow and precautions to take when approaching this important Asian market in the Assogiocattoli Academy webinar.

In 2024, the Indian toy market was valued at 2.2 billion US dollars and is expected to grow to 4 billion by 2030, with a CAGR (Compound Annual Growth Rate) of 12% between 2025 and 2030. At the same time, thanks also to government incentives promoting “Made in India”, there has been a significant increase in toy exports over the past three to four years. Available figures indicate a 239% increase from 2014-15 to 2023. As a result, India is no longer just a consumer market but is gradually becoming a production hub capable of competing globally.

Market profile

Currently, the Indian toy market already ranks among the world’s top ten by value. ATPA, said Vezzosi, encouraged all of its members to explore India more closely. Product category segmentation sees early childhood leading (25%), reflecting the demographic boom, the young population, and an expanding middle class willing to spend on toys. This is followed by dolls and plush, construction toys, vehicles/ride-ons, and board games. The main sales channel is large-scale retail (40%), but in recent years there has been a sharp expansion of e-commerce (35%), while specialty stores (25%) are losing ground.
 

Population and purchasing power

There are about 250 million people under the age of 14. This number is expected to rise as India’s birth rate is much higher than in Europe, the United States and the rest of Asia. Purchasing power is growing, although the average income currently stands at around 5,000 US dollars. By 2030, it is expected that over 60 million families will have an income between 8,000 and 10,000 dollars. As in much of Asia, there is a strong sensitivity to price when it comes to toy spending: around 60% of products on the market cost less than 10 dollars. To succeed in India, it is necessary to strike an excellent balance between premium and affordable ranges. Similar to many other countries, toy sales are subject to seasonality, with Christmas and Diwali, the Festival of Lights, accounting for 30–40% of annual sales.
 

Toy quality requirements

Since January 2021, the Toys Quality Control Order has required all toys sold in India to have BIS (Bureau of Indian Standards) certification. While obtaining this certification is quick and simple for products manufactured in India, the process is much longer (up to 6–8 months) and more expensive for imported products. Production units must also be certified; currently, India has not certified any in China, so exporting to India from China is not possible. For European manufacturers, BIS certification of the toy itself is sufficient.
 

Policies and regulations

The customs duty on finished toys is very high at 70%. According to Vezzosi, this is intended to hinder imports and encourage local production. VAT (GST) has recently been reduced from 18% to 5%, and an information campaign is underway to ensure that the price reduction is passed on to consumers. Label requirements include the ISI quality mark issued by BIS, a BIS license and an indication of the country of origin. Recently, tax incentives for Made in India have been introduced, creating production clusters in various regions.

Vezzosi notes that the European Union and India are negotiating a free trade agreement, which is expected to be finalized by the end of 2025. It is hoped that this will include tariff concessions, particularly for European exports.
 

Opportunities for European Companies

Several international companies have entered India with the intention of starting production aimed not only at the local market, but also at export. This trend began during the pandemic, driven by the desire to diversify sourcing away from China. Labour is available at a low cost, but there is a lack of expertise and difficulties regarding the import of raw materials must be taken into account.

There are opportunities for Italian and, more broadly, European companies in certain product categories. Premium toys, for example, have great potential, as middle-class parents living in large cities are willing to pay more for safety and quality. There is also a lot of interest in STEM and educational games, particularly robotics, coding and smart toys. India is very active in recycling, and demand for sustainable products such as wooden toys, recycled paper and bioplastics is growing. There is also strong demand for brands, licences, and international intellectual property. Moreover, India could be used as a production hub for exporting to countries (particularly in Southeast Asia) with which free trade agreements are in place, offering highly advantageous tariffs.
 

Risks and challenges

Vezzosi warns that regulatory barriers (BIS certification is valid for one year and recertification takes three to four months), tariff pressure and widespread counterfeiting (accounting for around 15% of the market) are issues to be considered. In addition, there is a lack of infrastructure, including testing laboratories, as well as roads, ports and railway stations. However, toy production clusters have been established in special economic zones with connections to the railway network and ports.
 

Access methods

According to ATPA, a pilot phase is necessary in order to access the Indian market. This begins with small import volumes distributed via e-commerce and premium stores, supported by a local partner. To overcome import obstacles, some members have decided to start local production in order to test the market, thereby reducing time and costs. In India, it is essential to rely on an established local distributor. The same applies when entering into licensing and IP agreements.
 

ATPA Assistance

ATPA can assist companies with many issues related to entering the Indian market. The association informs about regulatory changes, represents the industry in consultations with authorities, and provides feedback on necessary procedures. Among its members are Indian companies that not only manufacture but also act as distributors. In anticipation of establishing a chapter in India, ATPA has currently created a local committee to develop the project.

For more information, please contact Matteo Vezzosi at matteo@atpa.asia.

About the author
Italian journalist Daniele Caroli has been editor-in-chief and contributor to international trade magazines in the nursery products and toy businesses since 1994. He was President of BCMI (Baby Care Magazines International) and of ITMA (International Toy Magazines Association). Previously, he had worked as a journalist in music and consumer electronics periodicals.