Indian toy companies are feeling the strain of 50% punitive U.S. tariffs, which have slowed export momentum in the third quarter of 2025. Funskool CEO K.A. Shabir noted that while the company saw 20% year-on-year growth between April and October due to customers front-loading orders, the subsequent implementation of the tariff hike caused some projects for 2026 to be diverted to Vietnam and Indonesia.
Exporters are employing various strategies to retain customers, including offering selective discounts to offset the tariff burden. In some instances, customers have agreed to absorb a portion of the tariff hike themselves. Despite the current challenges, Funskool has secured development projects for the Autumn-Winter 2026 season, with production scheduled to begin in March 2026.
The U.S. remains the world’s largest toy market and is considered irreplaceable for Indian exporters. Consequently, companies are actively pursuing geographic diversification by engaging with customers in Europe and other non-U.S. regions. Funskool expects the tangible results of these diversification efforts to become visible over the next 12 to 18 months, and the company has recently expanded its portfolio by entering the electronic toys category.