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News → Toy market India: demand for quality brands & STEM toys

In 2016, traditional toys and games in India grew by 6% and further growth is expected. The organized players are facing stiff competition from the unbranded Chinese imports which are being sold at cheaper price and thereby affecting growth. However, with more awareness of quality branded products, more promotions and new launches, the demand is slowly increasing for these brands.

In terms of buying behavior for traditional toys, there is a gradual shift towards educational toys and arts and crafts as educated parents are focusing on education through entertainment. This has resulted in the increase in the demand for STEM toys.

Pre-school and construction continued to be the fastest growing categories with value growth of 20% in 2016. Due to extensive promotional campaigns and increasing awareness in urban areas, Lego remained the top-selling brand in construction.

In terms of seasonality of traditional toys, sales remain high during the months of May and June when most of the schools are closed. It is during this period that parents take their children out and buy new toys for them to play with during the summer vacation.

In India, expensive tech toys such as drones and robots remain very niche due to the high pricing and laws and regulations on their use. In India, flying a drone comes with legal proceedings as it is compulsory for the user to obtain prior permission from the authorities to fly it. In addition, the import of drones is banned in India, limiting international manufacturers from carrying out operations in India. 

Distribution of toys and games in India by formatDistribution of toys and games in India by format

Competitive landscape

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.

Top 5 toy companies in India; market shares in %Top 5 toy companies in India; market shares in %


The influence of the media has been playing a key role in the licensing of toys. Toy manufacturers have been benefitting from the success of shows, such as Motu Patlu, Chota Bheem and Shivay, which have been extremely popular amongst children. In addition, with the digitalization in place, children have been using different media devices such as tablets and mobile devices to watch their favorite shows and movies which has been some of the leading licensing brands.

Licensing of toys increased and this trend is expected to continue. Categories such as action figures and accessories, dolls and accessories and games and puzzles have been the major categories which generate sales in the licensing segment. Also, categories such as plush and model vehicles are expected to increase their share in the licensing space with manufacturers licensing the characters of Hollywood movies and characters.

Licensing remains a challenge for toys and games in India as counterfeit versions were widely available. Many counterfeit products from China are being imported and sold in India through e-commerce websites at a discounted rate. Despite trying to create awareness through social media and other media platforms, a lack of stringent laws is creating a hindrance to restricting the flow of counterfeit toys.

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