India Wanted to Become The World’s Toymaker. Then Tariffs Happened

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The morning of August fourteenth, like the start of most days, on the outskirts of New Delhi, was hectic. Cars jostled with buses, tooktooks, trucks, and occasional cow as millions of Indians made their way to work. But for Amitop Carbunda, that was all a breeze compared to what awaited him on his factory floor.

That was a crazy day. Our team work NonStop.

Ami tab is the managing director of Sunlord, a manufacturer that specializes in plush toys. I met a metisfactory in the city of Noida, just outside of New Delhi, and he told me about that hectic day.

That day, I cloked about twenty nine thousand steps he's an average of ten thousand.

Most of Sunlord's toys end up in American homes, Teddy Bears and Disney's Elsa Princess dolls for Walmart, nursery products for Pottery Barn and West Elm.

This is the packing area of metal detection was coming.

His factory was racing to get a container of kids yoga balls covered in plush fabric, assembled, packed and shipped out fast. This was the very first order for a new customer, American toymaker Learning Resources, and they had two days to make it happen. But some lord's deadline wasn't set by their new customer. It was put in play by the White House and President Donald Trump.

The White House making a move to slap of fifty percent tariff on imports from India. White House trade advisor Peter Navarro cranked up pressure on India to halt its purchases of Russian oil.

Earlier this year, India seemed like a safe bet. President Trump and Indian Prime Minister render Amodi were developing what seemed like a romance. Modi visited the White House in February. Many businesses thought India would be one of the first countries to strike a new trade deal with the US.

The government had kind of said, you know, this is going to be a safe place to manufacture. This is one of our priority countries.

Elana Woldenberg Ruffman is vice president of product development for Learning Resources, based outside Chicago. We met earlier this year when I traveled with her to visit factories in Vietnam.

We really started to amp up our efforts to expand our presence within India. The fact that the tariffies in India changed with like four weeks notice has real implications on real businesses like US.

Like many US companies, Learning Resources has been looking to reduce its reliance on China since Trump's first trade war. But when Trump took office this year and began ramping up tariffs with the aim of raising money and bringing manufacturing back to the US, that put the China end of the supply chain under pressure. It pushed Learning Resources to accelerate its plans to shift its supply chains elsewhere, to Vietnam and to India, to companies like sun Lord.

So the goods need to be in the stores by first of October for the Christmas sales.

With tariffs doubling, Learning Resources asked Omiitov's factory to speed up production. His team worked into the night, pushing fifteen thousand pieces through final assembly and packing that shipment barely made it out, and we slayed it to land in the US one day before the higher tariffs went into effect.

Whatever was before twenty seven dougars was twenty five percent a ship novice fifty percent.

When you're an American company sourcing products half a world away, there's already enough uncertainty to contend with. Tariffs don't just add cost, they add chaos.

The boat ended up getting checked in six hours too late, so the shipment had a fifty percent tariff instead of a twenty five percent tariff.

That costs the company fifty thousand dollars.

The cost of those terraffs is entirely something that we, as an organization have to pay. It is US, an American business.

That had to pay those tariffs.

The irony of it is, had we left it in China and eliminated all the work of finding a new factory, moving it, the product, training, the factory testing, et cetera, it would have been cheaper.

This is the big take Asia from Bloomberg News. I'm wanha. Trump's tariff war with China was supposed to create an opportunity for India, a chance to become the world's next factory floor, but then the White House changed its mind.

Bloomberg New channelna.

Amitap Karbunda is introducing me to his father, eighty one year old Ashak Karbanda.

Papa, Hello, sir. She is from Bloomberg.

Ashak founded Son Lord in nineteen seventy nine. Back then, the company made women's clothing and decor like curtains and cushions for export. Amitop built out the company's toy sector, which now makes up the bulk of the business. Ashak still serves as chairman, overseeing the company's finances and comes into the office most days. Father and son often eat lunch together in the office's homie kitchen.

This is Lentil's. Normally are Lentil's and gravy, but this is where I formed the speciality the family. The city cotta cheese and this is potatoes.

Amiitop joined the business after college with a degree in chemical engineering. Over lunch, he shares that his own son, representing the family's third generation, will soon be joining the company.

He studied economics here in India and then the US he did his master's in sustainability management.

It occurs to me that most of the toymakers I've met during this journey are family businesses. The Chicago toymaker I've been following learning Resources is run by the found under's grandchildren and great grandchildren. For decades, it's relied on Chinese manufacturers, who are also family owned. In Vietnam and here in India, the toy industry is dominated by companies passed down from generation to generation. It's part of the

The kind of uncertain day we are facing now, I've never faced it in my life, un certainly, which is totally out of your controling.

In Today, sun Lord employees about nine hundred workers in three factories. It specializes in bespoke nursery items like crib bedding and fabric toys.

This Christmas decord for one of the Williams Sonoma brands, which is that Disney Range Disney Design Custmos dech Cord. It's a snoopy ye.

When Trump briefly raised tariffs on China to one hundred and forty five percent earlier this year, Ami Toob was inundated with phone calls and emails. His factory was already running full, so he's only been able to take on a few new clients. One of those was Learning Resources, which ordered the yoga balls. They're covered with colorful furry animal faces unicorns, penguins, and puppies, and they'll be sold

It was a plan for a second order, but that has now been postponed.

Omiitob says Learning Resources has put about two dozen other products it was exploring with this factory on hold too. New orders from existing customers have also been pared down, and instead of growing fifteen percent this year as planned, the company will be lucky to even see a three percent growth.

There's a lot of unpredictability. You don't know what's going to happen tomorrow. In the short term, new investments, new products are a bit on hold.

It's a pattern playing out across India's burgeoning toy sector. India's higher tariffs on goods to the US put it at a disadvantage. Both China and Vietnam have struck better deals with lower levees, and the weight of India's sky high tariffs is causing pain in the country's biggest industrial hubs.

We produced two hundred thousand darts every day.

That's VIJENDERA. Babu, the founder of Microplastics, the largest toymaker in the country. I've flown to Bengalore, one thousand miles south of New Delhi to tour Vigendria's plant. The factory is huge, six hundred and fifty thousand square feet of manufacturing space that stretches over more than eleven football fields.

This three is apply to Walmart completely.

The plant looks busy with hundreds of workers assembling NERF guns, paw patrol cars, and Little Tykes baseball sets, but Viajendra says the factory isn't anywhere near capacity.

We are in still end of September, supposed to be a very, very peak season, but you can see still it is a bit slow.

I really come to understand how badly tariffs have hit his business when he shows me the plant's warehouse and it's eerily quiet. The storage area is as big as five Olympic sized swimming pools, full of products that were pulled off the production lines after Trump slapped that fifty percent tariff on India.

All these are waiting to be fully assembled now and then to be shipped because of the older stoppages or out of cancelation. So we are just trying to store here, so different toys, different parts of toys. You can see in thousands and thousands.

It is that during our tour he gets on a video call with one of his two other factories and shows me an even bigger warehouse with racks stacked full of finished products, not.

Eating, frusture, eating future, hacked and ready to go, everything done, fact and ready to be shipped.

As much as a quarter of the factory's orders have been put on hold or canceled. Thegender estimates the factory might be stuck with as much as twenty million dollars worth of goods. Then there's the loss of new business, which he says represents as much as fifteen million dollars all on pause. Like Omitop, the gender started the year with an ambitious growth plan. Forty percent existing customers were

His plant is completely ready. We should have opened and we should be getting the machines in next two months now. But now we are also waiting. Should we order those machines? Should we weight and watch? So we have taken addation to wait and watch.

Now with so much uncertainty, where does India's toy industry go from here? And can President Trump's tariffs really bring toy manufacturing back to the States. That's after the break. Wow, it's huge in here.

It's a six hundred and fifty thousands coudfoot plant. You'll have good about of walking today.

In a corner of the massive microplastics factory outside Bangalore, the sound of heavy machinery fades away. Vijender Baboo, the founder, brings me to the second floor. Here, the facility's industrial scale gives way to delicate artistry.

It's like going to a beauty salon to get those hairstyles.

And it really is like a salon for tiny dolls, and it requires all the expertise of a team of highly trained hairdressers, only in miniature. I watch you worker handle the first critical step hair rooting. He holds a bald plastic doll head up to a machine. As he rotates it, needles punch fine blonde strands with rapid fire speed. In seconds, the doll goes from bald to having a full head of shimmering hair.

Like hair transplantation.

You know, you can see that that is very much like a hair transplant.

You can see.

Then the real magic happens. I watch as dozens of women transform these wild manes into bobs, wavy curls, high ponies, and elaborate braids.

Yeah, you see the different styles there. It's very difficult to do it by machine.

Watching these rows of skillful stylists, I realize this is where India's manufacturers have a true advantage over the rest of the world. Even today, you can't automate a tiny, perfect front braid you need human hands, I asked Vijendra if he thinks this kind of toy manufacturing can be done in the US.

It's not that it can't be done, obviously, but it's all about the cost. Machines can manufacture these things, but then there's a lot of decoration, a lot of printing, a lot of plush which requires stuffing.

This reliance on skilled human hands reveals the flaw in Trump's promise to bring manufacturing jobs back to the US. These workers here make about twenty three thousand rupees a month or about two hundred and fifty dollars. Americans can't live on wages that low, so if these toys were made in the US, one of two things would have

I believe this is India's moment.

Manugupta is chairman of the Toy Association of India, a trade group for the manufacturers and dealers in the country.

This industry has the potential to become the next extile of the government innistry for India.

Entrepreneurs are here ready when willing to invest. An ecosystem has been created.

Prime Minister Mody is certainly betting that India can become the world's next toy factory. In twenty twenty, he launched the National Action Plan for Toys to try and capture a slice of the one hundred billion dollar global toy market. Mody's blueprint includes strict safety controls for all toys sold in India and ironically, a seventy percent tariff on imported toys. That's all designed to keep foreign competitors, namely China out.

A lot of companies understand and consider that these tariffs are not going to stay for too long. You need to prepare India and their manufacturers so that whenever these tariffs come down, they become an alternative to what they're buying in China of Yourtama Indonesia.

Preparing India's toy industry will require some big changes. Modi's National Action Plan has shut out foreign producers, but local manufacturers have been making toys mainly for domestic consumers. A lot of learning Resources says this means most Indian factories aren't yet making good with a quality that international buyers demand.

I think really the next big thing is just going to be adjusting the factories to align to Western standards, so quality standards, timelines, all those sort of little details that come with working with a new partner.

Alana sees India's potential, but right now it's still a tiny player in a massive market. India sold about one hundred million dollars worth of toys to Americans last year. China, on the other hand, sold eleven billion dollars worth in Vietnam three billion. Still as Trump's tariffs push companies like Learning Resources to pivot away from China. India's share of the toy market is growing, but China still dominates the

To be the best, we have to learn from the best, right and right now.

China is the best in this, but thanks to deep rooted tensions between India and China, it's hard to develop ties to Chinese entrepreneurs and to Chinese capital. Omitob says that's forcing entrepreneurs like him to come up with their own uniquely Indian solutions. At sun Lord's plant outside New Delhi, Omitob shows me one particularly expensive pain point for toymakers.

This is a two head laser cutting machine with an overhead camera. This is an elephant being cut. There you see there, you be hears. The tail is the body of the elephant.

Elephant ears and trunks have been stamped onto the gray plush fabric, a red laser being cuts the fabric, leaving a thin trail of smoke. Machines like this laser cutter cost the kind of money that few Indian factory owners have. Omiitob solution is to start a joint venture with two of his biggest competitors.

One plus one normally means in mathematics it translates to two.

Tarun Chiitwani owns a toy factory just up the road from some lord's facility, but in.

Terms of manufacturing activities and all that, one plus one translates to eleven.

Tarun Omitob and a third partner are opening a facility together next door to Tarun's toy factory. It will run twenty four to seven, the first laser cutting facility of its kind in India, and they're also planning a new factory with more than three hundred sewing machines. In the past, these three entrepreneurs would have been rivals.

Not today, we're not competing against each other. Our objective is to get business into India.

And as they wait for India to clinch a better deal with Trump that would lower the high tariffs, they have to come up with alternative strategies.

Plan A, tariffs are going to go away. We're going to be back to normal. Plan B we need to start expanding the market, look at other options. Plan C we have to focus on the Indian market.

Back in Chicago, Learning Resources has learned to be flexible too. Earlier this year, with China facing one hundred and forty five percent tariff, Alana says the company scouted a number of promising partnerships in India and plan to source about one hundred new products there, but Trump's tariff on India has changed that calculation.

As of today, we're shifting more into Vietnam than we are into India because there's no long term certainty being given to us by the administration. We would really love to manufacture there in broader scale, but economically, it doesn't make sense for me to manufacture in a location where it is going to be more expensive than manufacturing in another location where I can have equal quality.

I asked Alana about those yoga balls that were rushed out from Omiitab's factory over the summer. She says the company has enough stock for Christmas and the holidays, and perhaps a little more to stretch out inventory into twenty twenty six, and after that, tell me.

What the tariffs are, and I can tell you where I'll make it. But I really can't answer that question unless I know what my costs.

Are going to be.

This is the Big Take, Asia from Bloomberg News. I'm wanh. This was the second episode in our series following an American toymaker as it navigates the uncertainty of tariffs. Join us next time as we go to Vernon Hills outside Chicago to explore the final chapter. If you like the episode, be sure to subscribe at Bloomberg dot com, slash Podcast, offer, leave a review, and even better, tell a friend it really makes a difference. Thanks for listening. To see you next time.