India’s biggest toy manufacturer, Chennai-based Funskool, is in advanced stages of discussions with Mattel Inc.—makers of Hot Wheels, Barbie dolls, and Jurassic World toys—for producing the latter’s products at its Goa plants.
Speaking to TNIE, Funskool chief executive KA Shabir said that except for Mattel, all other US toy brands have halted production orders because of US tariffs. He added that orders from US customers have slowed significantly following the tariff announcement. The current tariff on toys stands at 50%.
Shabir said: “The real impact (of US tariffs) will show in 2026. The tariffs are stalling the growth momentum of the toy industry just when global brands began investing in India. With the US being the world’s largest toy market, such high tariffs make sourcing from India unworkable, pushing business to Southeast Asian countries.”
On growth plans and current operations, Shabir said the first two quarters of FY26 indicated that the company was on track to achieve its target of 30% export growth. “But the imposition of tariffs has dampened our export growth expectations. Till September, exports are expected to grow only around 20–22%,” he noted.
The company has set an overall growth target of 15%, mainly driven by exports. “With 40% of our business linked to the US, the tariffs are a serious setback. The US business cannot be replaced overnight—the scale is unmatched. This will delay our growth plans, not only for Funskool but for India’s toy industry as a whole,” Shabir said.
Funskool has put on hold the expansion of its Ranipet plant due to order cancellations, though expansion at its Goa plant is progressing as scheduled. The Goa facility is expected to operate at full capacity by the third quarter of FY26. Together, the two plants generate $50–55 million in revenue.
“For the past four to five months, we have been working on new projects slated for delivery next year. However, everything has been put on hold for now. Our customers may inform us about new orders in the next two to three weeks,” Shabir said.
Currently, 33% of Funskool’s products are consumed locally, 27% are exported to the US, and 35% to Europe, including the UK. Internationally, the company has tied up with global brands such as Spin Master (Canada), Moose (Australia), Melissa & Doug (US), ELC and Flair (UK), and most recently, Buffalo Games. Every year, Funskool launches 60–70 products across multiple categories.
On GST rate rationalisation, Shabir said: “The GST on non-electronic products has come down from 12% to 5%, but the toy industry is seeking clarity on electronic toys.”