Funskool India Sets Sights on Global Markets and Electronic Toy Expansion
Funskool India, a prominent toy manufacturer promoted by the MRF Group and headquartered in Chennai, is actively pursuing export opportunities in new international markets. The company, which recently ventured into the electronic toys segment, is focusing on expanding this category to drive future growth.
Strategic Entry into Electronic Toys
In an exclusive interview, K A Shabir, CEO of Funskool India, detailed the company's plans. "Our foray into electronic toys began two months ago, targeting the infant and preschool segment under the Giggles brand," Shabir explained. The initial launch includes toddler vehicles like the Dump Truck and Cargo Truck, equipped with sound and light features.
Over the coming months, Funskool intends to broaden its electronic range with more advanced products such as learning pads, keyboards, and laptops. Currently, the portfolio features 5-7 electronic stock-keeping units (SKUs), contributing modestly to revenue. However, the company anticipates strong long-term potential, projecting that electronic toys will account for approximately 10% of total revenue by FY2030. This growth is expected to be fueled by product diversification, competitive pricing, and increasing consumer acceptance in early-learning categories.
Notably, one of Funskool's in-house developed products, the Jumpin Melodies Piano, designed for the domestic market, has been adopted by a major US retailer and is performing well in sales volumes.
Impact of Trade Agreements and Tariff Reductions
Shabir highlighted the potential benefits of the India-European Union Free Trade Agreement (FTA) and the US reducing tariffs on Indian imports. "For Funskool, where around 45% of exports are linked to the US market, the tariff reduction is positive," he stated. However, he clarified that the current effective tariff remains at 25%, not 18%, as shipments are being cleared at that rate.
The earlier imposition of a 50% tariff disrupted sourcing plans, causing the loss of opportunities for autumn–winter 2026 projects. Even with favorable tariffs returning, restoring these projects is challenging due to production and shipment timelines starting from April–May. "The temporary 50% tariff effectively pushed back Indian manufacturing momentum by almost three quarters to one year," Shabir noted. Consequently, the full benefits of lower US tariffs are expected to materialize more significantly in FY 2027–28 as new project allocations resume.
In contrast, the India-EU FTA is anticipated to support export growth more immediately. During a recent visit to the Nuremberg toy fair in Germany, Funskool observed strong optimism among European customers, and the FTA is expected to further enhance sourcing interest from Europe.
Financial Targets and Export Diversification
Funskool reported that total revenue for FY25 is projected to exceed $40 million, with a target of nearly $50 million for FY26. Exports are expected to constitute over 70% of the total turnover.
The company is actively exploring expansion into new export markets, with a current focus on Eastern European and South American countries. "We see strong opportunities for incremental growth in these regions," Shabir emphasized, adding that this move will help diversify the export base and contribute additional revenue.
Growth in E-commerce and Quick Commerce Channels
E-commerce continues to be a vital channel for Funskool, growing at 15% annually, with a higher growth rate of nearly 20% in the first half of the year. The channel is segmented into two categories:
- Conventional e-commerce platforms: Deliveries typically occur within 24–48 hours.
- Quick commerce (q-commerce): Deliveries are completed within 10–20 minutes.
As of December 2025, q-commerce accounted for nearly 60% of total e-commerce sales and is growing at a rapid 50% year-on-year, making it the fastest-growing channel within the toy category.
Tapping India's Domestic Toy Market Potential
With more than 25% of India's population under the age of 14, the domestic toy market presents significant opportunities. However, Shabir pointed out that awareness among parents about the role of toys in holistic child development, especially from infancy, needs strengthening. "Toy spending in India is still relatively low, and toys are often not viewed as essential developmental tools," he remarked, indicating room for growth through education and marketing efforts.
