“We see quite a lot of demand for vocabulary and STEM [science, technology, engineering, mathematics]-focused play units like constructing blocks for studying new phrases,” stated Sourabh Jain, founder and chief government of EleFant. “The standard of supplies has additionally improved as mother and father are more and more preferring merchandise which can be manufactured regionally.”
EleFant raised ₹6 crore in seed funding from Enterprise Catalysts and Malpani Ventures in July. It’s amongst startups, together with Mirana Toys, Jammbo, Snooplay, Toyflix, Kidology, and Legend of Toys, which have raised funds from enterprise capital corporations reminiscent of Riverwalk Holdings, InfoEdge Ventures and AngelList over the previous two years.
Bigger rounds have been flowing in, albeit slowly. Candytoy raised $13 million in a Collection A from Sixth Sense Ventures and Abakkus, whereas Kido Enterprises has drawn a number of rounds from UBS, Heritas Capital, and 1Crowd in 2024. The momentum has continued this yr, with Peeko securing $3.2-million led by Stellaris, Candytoy closing one of many largest current offers, and Kido’s cumulative funding reaching $6.9 million. Tuco Youngsters raised $4 million from RTP International this week.
The size of alternative is huge, with a base of practically 300 million kids throughout India and a handful of scaled gamers, in response to Satish Meena, co-founder of Datum Intelligence, an information analytics agency. Nonetheless, this optimism remains to be marked with warning because the Indian toymaking business, valued at $2–3 billion by Redseer, dangers dropping abroad purchasers after Donald Trump’s 50% tariffs on Indian items.
Tariff menace
“When tariffs first got here out, in that first part our enterprise gained quite a lot of momentum, as a result of many world retail companions began flocking to Indian manufacturers and producers,” stated Dhvanil Sheth, founding father of Peak XV-backed instructional toys maker Skillmatics. “However the tables have turned: “India has turn into the centre of the storm, with 50% tariffs, placing us at a relative drawback… we’re engaged on making our provide chain extra agile, reassessing value buildings, and rethinking pricing.”
Skillmatics has raised $23.8 million up to now and continues to rely closely on abroad demand, with North America accounting for 65-70% of income, India 15-18%, and the UK round 10%.
The Bureau of Indian Requirements’ obligatory high quality and security approval for toys offered in India from 2021 has additionally curbed low-cost imports. The requirement is aimed toward strict mechanical, chemical, and electrical security compliance whereas selling safer, regionally made toys.
“They’ve successfully stopped the influx of low-cost toys from China, which earlier made up the majority of imports,” stated Meena of Datum Intelligence. “The second huge step has been tightening BIS certification, which is now enforced extra often.”
Alongside, state and central governments provide incentives for native manufacturing, he stated. “Mother and father proceed to allocate disposable revenue in direction of toys — throughout instructional play, collectibles, and all kinds of merchandise they need for his or her youngsters.”
Fast-commerce recreation
Fast supply platforms have added one other layer of progress. “Fast commerce right this moment contributes about 10–15% of our India revenues,” Sheth says, although he admits it comes with limits: “What it delivers is comfort of supply however solely throughout a choose vary of merchandise.”
Demand is rising from gifting. Birthday celebrations have gotten far more frequent, particularly within the high eight cities, with mother and father spending considerably on presents, in response to Meena.
Toymaker Peeko is betting extra aggressively on fast commerce, with 1,000 stock-keeping items from a single 4,000 sq. ft. darkish retailer.
“In babycare, the majority of consumption—virtually 70–75%—comes from attire & equipment, toys, and footwear. The remaining 25-30% is private care like shampoos, soaps, diapers, wipes and child gear,” stated co-founder Chetan Sharma. “Attire, footwear and equipment are virtually non-existent in horizontal fast commerce (providing a number of classes) and restricted choices exist for toys from a gifting standpoint.”
Nonetheless, toys lack the acquisition frequency to maintain standalone fast commerce.
“Most households purchase a couple of times a month… a standalone toy-focused fast commerce app wouldn’t essentially make quite a lot of sense, in response to Meena. “For such an app to work, it could must bundle in different classes like clothes or gifting.”
He contrasts this with pet meals. “…..[it] has excessive frequency, and pet house owners purchase from chosen manufacturers — weekly or month-to-month — which retains clients engaged and the app viable,” stated Meena. “In distinction, with youngsters, consumption patterns are inconsistent: meals modifications each 3–6 months, and toys drop off after a couple of years, making it a lot tougher to maintain a standalone class.”
Furthermore, margins stay underneath pressure. For home gamers, the GST lower from 12% to five% presents some cushion, although it does little to offset export-side tariff pressures, in response to Meena. “With a 50% tariff, the influence on margins is important. It additionally dangers making you uncompetitive in opposition to Chinese language and different manufacturers.”
Doorstep supply comfort
Mayank Jain, an investor at Stellaris Enterprise Companions, nevertheless, sees alternative in single-category fast commerce.
“Mothers search worth as a result of the shelf lifetime of attire could be very restricted — youngsters develop quick. That’s why the class has traditionally been unbranded; only a few mothers are prepared to pay a premium for manufacturers,” stated Jain. “Vertical fast commerce now presents a possibility to pose as a severe competitors to offline—combining offline inspection and immediate gratification with the comfort of doorstep supply.”
But, FirstCry, the dominant babycare platform, has publicly stated it doesn’t see fast commerce as a near-term menace. Co-founder Supam Maheshwari argues that the overlap is restricted, with fast commerce catering largely to last-minute diaper purchases quite than the broader babycare basket.
