A leading international toy maker has started exploring options for sourcing toys from India, due to the ongoing trade war between the U.S. and China, said a top industry executive.
“The trade war has put pressure on China. Besides, the labour cost is going up significantly in China,” said Arun Mammen, chairman, Funskool India. “As a result, international companies are planning to source not only toys but also other products from India and southeast Asia,” he said. According to him, toy major Mattel had already initiated talks with Funskool, while other players were seriously contemplating alliances.
For nearly three years, Hasbro has been sourcing products from India and SpinMaster recently started importing products from Funskool Goa factory, he said.
Sensing the demand from the overseas market, Funskool established a new plant in Ranipet to meet the needs of SpinMaster, exclusively. Trial production at the unit, which is about 110 km from Chennai, began on Wednesday. The first consignment will be shipped by June.“The world toy market is estimated at $90 billion and India accounts for 0.5% at $450 million. The global market is getting bigger and is expected to grow at 10% CAGR. India has huge potential,” said John Baby, CEO, Funskool India.
In the last 10 years, the Indian toy industry had grown 8-10%, whereas Funskool had grown 10-15%, he said.
“The Goa unit is running at 80% capacity; Ranipet will also touch 80% in two years. After that, we will put up one more unit in the same premises here,” Mr. Baby said.
Funskool said it would end this fiscal with ₹225 crore in revenue compared with ₹235 crore last year. The dip has been attributed to factors such as customs duty hike, demonetisation, GST and discontinuation of a pact with Lego.
