‘EU-FTA, tariff relief will power export push’

Leading toy manufacturer Funskool India is keen on exporting to new markets. Promoted by MRF Group, the city-headquartered firm, which recently forayed into electronic toys, will expand in this segment. In an interview, K A Shabir, CEO, speaks about the domestic toy market potential, free trade agreement (FTA) with European Union (EU), the US reducing tariffs on Indian goods, and growth in e-commerce and q-commerce channels. Excerpts:

 You entered the electronic toys category two months ago. What are your plans?

Our foray is focused on the infant and preschool segment under the Giggles brand. We have begun by launching toddler vehicles such as Dump Truck and Cargo Truck, featuring sound and light functions. Over the coming months, we plan to expand this range with more feature-rich electronic products such as learning pads, keyboards, and laptops. At present, we have 5-7 electronic SKUs in our portfolio. While their contribution to revenue is modest, we see strong long-term potential. By FY2030, we expect electronic toys contributing around 10% of our total revenue, driven by product expansion, affordable pricing, and growing consumer acceptance in early-learning categories. One of the electronic products developed for our domestic market, named Jumpin Melodies Piano, has been conceptualised, designed, developed, and manufactured in-house. It has been adopted by a leading US retailer for the US market and is doing strong volumes.





 How will the India-EU FTA and US reducing tariffs on imports from India benefit business?

The current effective tariff on shipments from India to the US is still 25%, not 18%, as shipments are presently being cleared at that level. For Funskool, where around 45% of exports are linked to the US market, the tariff reduction will certainly be positive. However, the earlier 50% tariff had disrupted sourcing plans. We lost opportunities for the autumn–winter 2026 projects. Even with favourable tariffs returning, restoring those projects is challenging because production and shipment timelines begin from April–May. The temporary 50% tariff effectively pushed back Indian manufacturing momentum by almost three quarters to one year. We therefore expect the full benefit of lower US tariffs to be felt more meaningfully in FY 2027–28, as new project allocations begin to flow back. The EU FTA, on the other hand, is expected to support export growth more immediately. During our recent visit to Germany for the Nuremberg toy fair, we observed strong optimism among European customers, and we believe the FTA will further strengthen sourcing interest from Europe.

 What was your total revenue in FY25? What is the

expectation for the

current fiscal (FY26)?

Total revenue for FY25 is expected to close at a little more than $40 million. For FY26, we are targeting revenue closer to $50 million. Exports are expected to contribute more 70% of the total turnover.

 Do you have plans to expand exports to more markets?

We are actively looking at expanding exports into new markets. Our current focus is on Eastern European and South American countries, where we see strong opportunities for incremental growth. These markets are expected to contribute additional revenue while helping us further diversify our export base.

 How is growth in the e-commerce and q-commerce channels?

E-commerce grows at 15%, having seen higher growth of nearly 20% in the first half of the year. The channel is divided into two — conventional e-commerce platforms, where deliveries typically happen within 24–48 hours, and quick commerce, where deliveries are completed within 10–20 minutes. As of Dec 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.

 What are your plans for tapping the potential of India's growing market for toys. ?

With more than 25% of India's population under the age of 14, the opportunity for the toy industry is undoubtedly significant. Awareness among parents about the role of toys in a child's holistic development — especially from infancy — needs to be strengthened. Toy spending in India is still relatively low, and toys are often not viewed as essential developmental tools.