Unlocking Opportunities: How US Restrictions on Chinese Goods are Boosting Indian E-Commerce Exports

New Delhi: The recent decision by the US to tighten regulations on low-value e-commerce shipments from China is creating a significant opportunity for Indian online exporters. If the red tape is reduced and the government steps in to help, India could become a major player in this market.

India already boasts over 100,000 e-commerce sellers and exports worth around $5 billion. These sellers are ready to take advantage of the gap left by China, especially in areas like handicrafts, fashion, and home goods, according to the Global Trade Research Initiative (GTRI).

Starting May 2, shipments from China and Hong Kong that are under $800 will be slapped with a hefty 120% import duty. This marks the end of duty-free entry for these goods and is expected to disrupt Chinese supply chains, opening avenues for other countries to step in. Chinese companies like Shein and Temu have dominated this space, but they may soon find themselves facing stiff competition.

In 2024, the US received over 1.4 billion low-value packets from around the globe, with China sending about $46 billion worth. GTRI Founder Ajay Srivastava believes that India has a unique opportunity here. However, he emphasizes that the country needs to streamline its banking, customs, and export systems quickly to make the most of it.

Currently, India’s trade infrastructure favors large, traditional exporters. Many small online sellers feel overwhelmed by the bureaucracy. Srivastava notes that Indian banks have trouble managing the high volume and low-value nature of e-commerce. For instance, the Reserve Bank of India (RBI) permits only a 25% difference between the declared shipping value and the final payment. But this tight margin complicates online exports, where various factors like discounts and returns can create larger discrepancies.

He suggests that increasing this limit to 100% would allow banks the flexibility they need to assist small exporters more effectively. Furthermore, the costs associated with processing these small shipments can eat into the profits, often running between Rs 1,500-2,000—sometimes nearly half the shipment’s value. Eliminating such fees for low-value exports and transitioning to digital processes are crucial steps.

The RBI could also help by establishing clear timelines and support systems for exporters facing issues. GTRI highlights the need for India’s customs system to digitize fully, ensuring 24/7 inspections and straightforward digital checklists to aid small exporters. Improving courier-service shipments to fit terms like “Delivered Duty Paid” could also help avoid delays caused by paperwork.

Additionally, smaller e-commerce sellers often don’t have access to affordable loans. While major companies enjoy interest rates of 7-10%, smaller sellers face rates of 12-15% and frequently miss out on public credit programs. Including these small players in priority sector lending could equalize the opportunities.

Another critical point is that courier shipments, so common in e-commerce, often miss out on essential export incentives like RoDTEP and Duty Drawback. Extending these benefits to e-commerce would be a game changer for Indian exporters.

To compete on a global scale, India must revamp its banking and trade systems to cater to the growing digital economy. If executed well, this could usher in a new era of inclusive growth for a diverse range of exporters.

As the e-commerce landscape evolves, keeping an eye on these developments is crucial for both businesses and policy-makers. The potential for growth is immense, but realizing it depends on swift and effective reforms.



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CHINESE GOODS, INDIAN E COMM SELLERS, TRUMP TARIFFS, GTRI, US TIGHTENING ON CHINESE GOODS OPENS HUGE EXPORT WINDOW FOR INDIAN E-COMM SELLERS: GTRI