As India moves toward Union Budget 2026, the domestic toy industry stands at a critical juncture. Over the past few years, government policy has reshaped the sector from an import-dependent market into a growing manufacturing ecosystem. Budget 2026 now carries the responsibility of sustaining this momentum and unlocking the next phase of growth.
Industry leaders expect continuity, clarity, and targeted incentives. They want policy measures that strengthen manufacturing clusters, support MSMEs, improve access to capital, and build a skilled workforce capable of producing globally competitive toys.
Policy Momentum Has Transformed the Toy Sector
The Indian toy industry has undergone
a visible transformation since the launch of the National Action Plan for Toys. Import restrictions, quality control norms, and manufacturing incentives encouraged domestic production. Indian manufacturers increased capacity, improved design capabilities, and entered export markets with renewed confidence.
These changes created optimism across the value chain. Manufacturers invested in tooling, safety testing, and design innovation. Startups and MSMEs found space to compete in categories once dominated by imports.
Union Budget 2026 now represents an opportunity to reinforce these gains.
Industry Seeks Clarity on PLI Scheme for Toys
One of the most closely watched expectations revolves around the proposed Production Linked Incentive (PLI) scheme for the toy sector. Industry participants anticipate formal announcements, eligibility criteria, and timelines.
Manufacturers believe a well-structured PLI scheme can accelerate scale, improve cost competitiveness, and attract long-term investment. Many companies already operate at efficient capacity but require financial support to expand production lines, invest in automation, and adopt global safety standards.
Clear communication on PLI will reduce uncertainty and encourage faster decision-making across the sector.
Manufacturing Clusters Remain a Key Priority
The toy industry wants Budget 2026 to prioritize cluster-based development. Manufacturing clusters lower costs, improve logistics, and enable shared access to testing labs, tooling facilities, and design centers.
States such as Uttar Pradesh, Karnataka, Tamil Nadu, and Gujarat already show early signs of cluster growth. Budgetary support for common infrastructure can strengthen these hubs further.
Industry leaders believe cluster-focused investment can also drive regional employment and support MSMEs that form the backbone of toy manufacturing.
Skill Development Demands Greater Attention
Toy manufacturing requires specialized skills in molding, electronics, design, painting, and quality testing. Industry stakeholders want Budget 2026 to allocate funds toward targeted skill development programs.
Vocational training partnerships with ITIs, design institutes, and private players can address talent gaps. Skilled workers improve productivity, reduce wastage, and enhance product quality.
A trained workforce also supports India’s ambition to move beyond low-cost manufacturing into design-led, premium toy segments.
MSMEs Look for Easier Access to Finance
Small and medium toy manufacturers often struggle with working capital constraints. High tooling costs, seasonal demand, and delayed payments affect cash flows.
The industry expects Budget 2026 to expand credit guarantee schemes, reduce borrowing costs, and improve access to institutional finance. Simplified compliance and faster GST refunds can also ease operational stress.
Financial support for MSMEs will strengthen supply chains and prevent overdependence on a few large players.
Export Incentives and Global Market Access
India’s toy exports have grown steadily, but manufacturers want stronger support to compete globally. Export incentives, marketing assistance, and participation in international trade fairs can help Indian brands build visibility.
Budget 2026 can also support compliance with global safety standards and certifications. These measures will help Indian toys access markets in Europe, the United States, and the Middle East.
Export-led growth remains critical for scaling the industry sustainably.
Industry Voice: BIDSO on Budget Expectations
Industry leaders continue to emphasize policy continuity and long-term vision. Mr. Aditya Krishnakumar, Co-founder of BIDSO, captures this sentiment clearly in his year-ender perspective:
“The Government has demonstrated a clear and consistent commitment through its National Action Plan for Toys, reinforcing confidence within the industry. The 2025 Budget further strengthened this momentum — bringing renewed optimism with its focused thrust on transforming India into a global hub for high-quality, self-sufficient toy manufacturing. The recent reports of a proposed incentive program with an estimated outlay of ₹13,000 crore (approximately USD 1.5 billion) under a potential Production Linked Incentive (PLI) scheme further underscore a strong policy commitment to the sector’s growth. We are eagerly awaiting further developments in the upcoming Union Budget — whether through the PLI scheme or other targeted manufacturing incentives — as such initiatives will play a pivotal role in fostering toy manufacturing clusters, enhancing workforce skills, and building a sustainable ecosystem for producing globally competitive toys that truly embody the spirit of the ‘Made in India’ brand.”
His remarks reflect the broader industry mood. Manufacturers want assurance that policy support will continue with the same intensity.
Innovation and Design Need Policy Support
Beyond manufacturing scale, the industry wants Budget 2026 to support innovation and original design. Indian toy makers increasingly invest in character creation, educational toys, and STEM-based products.
Grants for design innovation, IP protection, and collaboration with design institutes can help Indian brands differentiate globally. Original IP improves margins and reduces dependency on contract manufacturing.
Policy backing in this area can move the industry up the value chain.
Quality and Safety Infrastructure Remains Essential
Quality compliance has improved significantly, but manufacturers still face testing bottlenecks. Budget 2026 can allocate funds for additional testing laboratories and faster certification processes.
Efficient quality infrastructure ensures compliance without delays. It also builds trust among domestic and international buyers.
High standards support India’s ambition to position itself as a reliable toy manufacturing destination.
What Budget 2026 Can Achieve for the Toy Industry
If Budget 2026 addresses these expectations effectively, the toy industry can enter a high-growth phase. Manufacturers can expand capacity, create jobs, and increase exports. Startups can innovate with confidence. MSMEs can integrate into global supply chains.
Policy stability will matter as much as financial incentives. Clear direction will encourage long-term investment and ecosystem building.
Outlook After the Budget
The Indian toy industry no longer asks for protection alone. It asks for partnership. Budget 2026 can act as a catalyst that transforms early success into sustained leadership.
With the right mix of incentives, infrastructure, and skills, India can emerge as a global hub for high-quality toys. The industry now looks to the Finance Minister to reinforce this vision and carry the “Made in India” toy story forward with conviction.