Body blow for Chinese e-commerce companies as Indian government bans 'gift' route

Indian government has amended the Foreign Trade Policy 2015-20 to check the import of goods from Chinese e-commerce companies through gift route. Such duty-free imports will no longer be cleared by Customs, the government said in a notification on Thursday.

“Import of goods, including those purchased from e-commerce portals, through post or courier, where Customs clearance is sought as gifts, is prohibited Excepts for life saving drugs/medicines and Rakhi (but not gifts related to Rakhi). Import of goods as gifts with payment of full applicable duties is allowed,” the Directorate General of Foreign Trade said in a notification.

Indian media had reported on Chinese e-commerce businesses including Club Factory, Shein and Aliexpress avoiding customs duties and taxes by exploiting the gift route, keeping the prices at a minimum. Indian government doesn’t slap import duties on gifts up to Rs 5000. The provision was put in place to let NRIs (Non-Resident Indians) send goods and chattels back home without the burden of the tax.

It all started as a discussion thread in an online consumer forum of LocalCircles last July. Scores of consumers claimed they did not receive invoices for deliveries from Chinese e-commerce platforms. The absence of MRP labels on products also raised a few eyebrows. LocalCircles acts as an interface between consumers and government departments including the Department of Consumer Affairs, Railways and Department of Urban Development.

When a consumer orders a product from a Chinese e-commerce app, it is generally delivered at his/her doorsteps via China post and India Post or sent with the consolidated shipment through a courier logistics company and an importer on record in India, said a report by LocalCircles.

Gifts, commercial samples and low-value dutiable consignments (commercial shipments upto worth Rs 100000 and liable to be charged duty) were cleared faster through an express route