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India to say no to free “gifts” from Chinese e-tailers

China’s Shein, AliExpress, and Club Factory have been caught evading customs duties.

Photo by VanveenJF on Unsplash

In a calculated move, India has resorted to totally eliminating the provision for “exemption of custom duties on receipt of duty-free ‘gifts and samples’ priced below USD 70 when imported to India.”

The intent behind this move is to place a curb on Chinese e-commerce vendors such as Shein, Club Factory, AliExpress, among others, that have been notoriously evading customs duty while sending products in India.

The Central Board of Indirect Taxes and Customs of India, which lays down policies concerning levy and collection of customs, was earlier toying with implementing a ceiling on the number of gifts a person can receive, but had to drop this thought as it was fraught with impracticality.

“There were multiple legal options we were looking at; one being limiting the number of gifts to four per individual. But to implement this practically would be difficult, so we’re looking at a policy that prohibits the clearance of gifts altogether,” a senior government official anonymously told local newspaper Economic Times.

According to the Indian government, Chinese e-tailers were brazenly working their way around the said provision, and were escaping paying customs duty and taxes under the guise of duty-free gifts and samples.

However, this is not the first time that the Indian government has had a run-in with Chinese e-commerce players flouting the cross-border trade rules of India. In December 2018, the Mumbai customs department, had captured multiple consignments of goods masquerading as gifts from China.

Five months ago, again the Mumbai customs confiscated nearly 500 packages of apparel from Chinese lifestyle e-tailers Shein and Club Factory and sealed their warehouses as they were devaluating and incorrectly declaring goods to circumvent customs duties.

It is reported that fronts like Sino India Etail and Globemax, were acting as importers on behalf of Shein and Club Factory, respectively. They acted as intermediaries between customers and the Chinese e-tailers, to refrain from paying more duties that personal imports are associated with.

An official told ET, that the three main express cargo ports in Mumbai, Delhi, and Bengaluru, which make up for 90% of such imports, had put an embargo on the clearance of gifts. “We’ve curbed it (import of gifts) completely. Now policy-wise we’re planning in such a way that the word ‘gift’ itself is removed. The policy can say clearance sought as gift is not permitted, or in other words, whatever you’re importing you need to pay duties and clear it.”

Policies are also being drafted by the Department for Promotion of Industry and Internal Trade to ensure that all e-commerce players, global as well as local, have to get registered in India, enabling authorities to track their sales numbers. Any spikes deviating from the usual numbers would attract the attention of regulatory bodies.

Over the last few years local traders and small Indian e-tailers have been putting out their grievances against Chinese e-commerce companies for taking benefit from the provision of exemption from customs duties for gifts below USD 70.