Spielwarenmesse’s Christian Ulrich says Indian toy makers could follow China’s OEM-to-brand path, but MSME-heavy production limits their ability to supply global retailers
Indian toy manufacturers are attracting greater interest from international buyers, but converting that interest into sizeable export orders will depend on whether smaller producers can build the capacity to meet large-volume requirements, according to Christian Ulrich, Executive Board Member, Spielwarenmesse eG.
Ulrich said participation from Indian companies at the Nuremberg-based toy trade fair has been accelerating, with 50–60 Indian companies expected at the next edition. The growing presence reflects rising interest in India as a sourcing market, but he said buyers remain focused on whether suppliers can consistently deliver at the required scale and quality.
“During the past years the participation of Indian companies was accelerating. India for us is one of the most dynamic markets in the world at the moment,” Ulrich said.
For large international retailers, however, interest in a new sourcing market does not automatically translate into orders. Suppliers need to demonstrate that they can maintain production volumes and quality standards over sustained periods, particularly when dealing with large retail chains.
“What they are looking for is of course that they can rely on the producer, especially if you’re talking to the big companies,” Ulrich said.
He cited large retailers such as Walmart, where suppliers may have to fulfil substantial orders across markets. Such buyers therefore require manufacturers that can commit to large quantities without compromising on quality, including meeting stringent quality checks imposed by major discount and retail chains.
“This is the most important thing and of course the quality which is needed is very important,” Ulrich said. “It’s the ability to deliver the wanted quantities and of course it’s the right level of quality.”
MSME Structure Limits Manufacturing Scale
The capacity constraint is particularly relevant because much of India’s toy manufacturing base remains concentrated among micro, small and medium enterprises. Atish Laddha, Partner, Head of Indirect Tax Service, Roedl, said the industry has a relatively small number of large manufacturers, while a larger number of smaller companies would need to expand their production capabilities before they can consistently service major global buyers.
“The capacity is something which will still boil down to the manufacturers how they build up the capacity to cater these big fishes like Walmarts and other discounters,” Laddha said.
For Indian manufacturers, meeting international standards and offering competitive prices may therefore not be sufficient on their own. A supplier capable of producing a limited volume can still lose a global order if it cannot scale production quickly enough or provide consistent supply across multiple markets.
“Even if you meet the quality and pricing for some manufacturer, the next bigger challenge is always the capacity,” Laddha said.
That creates a structural challenge for smaller Indian businesses that are seeking to move from domestic supply to international sourcing contracts. Large overseas retailers typically require suppliers with sufficient manufacturing depth to support sizeable and recurring orders, making investment in capacity increasingly important for Indian companies looking to expand exports.
“They can’t be trusting on a smaller setup to fulfil their bigger capacity needs for the worldwide market,” Laddha said.
From OEMs To Own Brands
Ulrich sees a possible path for Indian manufacturers in the evolution of China’s toy industry. Many Chinese companies initially built their businesses by producing for other brands before using that manufacturing base to develop their own products and brands.
“Most of the Chinese companies, let’s say 10-20 years ago they started as OEM producers but then finally they tried to build their own brands and I think this could be a similar procedure in India,” Ulrich said.
The model could allow Indian manufacturers to use contract manufacturing as a route to build scale, while gradually developing their own brands and intellectual property. Ulrich said companies in China today often combine their own brands with OEM and ODM operations, giving them multiple routes to market.
“Many, I would say most of the companies they are having their own brands and they are offering these OEM or ODM services as well so they do both,” he said.
Cost competitiveness will remain central to that transition. Indian manufacturers seeking international business would have to combine production efficiency with the quality standards expected by global buyers rather than compete only on lower manufacturing costs.
“You did not talk about prices up to now but of course this is the main idea to have somebody who is producing at very low costs. So this is what it’s all about,” Ulrich said.
Laddha said India can potentially compete with established sourcing markets if manufacturers can bring together quality, pricing and the capacity required by large buyers. However, the scale gap remains a critical hurdle for smaller companies seeking to participate in global supply chains.
“That’s the advantage India can offer at a global platform which China has been doing for decades now and if India has to step up, India has to match the quality with pricing,” Laddha said.
The India-European Union free trade agreement could provide another opportunity for Indian toy exporters, but it would not address the industry’s underlying production constraints. Laddha said negotiations were still covering investment and quality standards, with implementation potentially expected around the second quarter of next year. Greater European market access could widen the buyer base, but manufacturers would still need the capacity to fulfil larger orders.
Beyond exports, Ulrich also pointed to a change in India’s domestic toy market, where demand is moving beyond products primarily associated with learning and STEM applications. Board games, Kidadult and other forms of social and entertainment-led play are gaining relevance as the consumer base broadens.
“Now even I think there’s another change now to toys that might be having social effect are just fun maybe,” Ulrich said.
For Indian manufacturers, the opportunity therefore extends beyond rising interest from international buyers. The bigger test will be whether companies can build the manufacturing scale, quality systems and cost competitiveness needed to turn that interest into sustained global business.
