The report states that starting 2 May, Chinese ecommerce shipments under USD 800 to the US will face a steep 120 per cent import duty, ending their duty-free entry.
With the United States (US) cracking down on Chinese low-value ecommerce shipments, India is well-positioned to fill the gap left by China, particularly in customised, small-batch products like handicrafts, fashion and home goods, as per a report.
On 2 April 2025, US President Donald Trump signed an executive order removing the de minimis exemption for imports from China and Hong Kong. This rule had previously allowed small packages valued upto USD 800 to enter the US without any duty, benefiting Amazon and Chinese firms like Shein and Temu, as per a report by the Global Trade Research Initiative (GTRI).
The report further highlighted that starting 2 May, Chinese ecommerce shipments under USD 800 to the US will face a steep 120 per cent import duty, ending their duty-free entry. This move is expected to disrupt Chinese supply chains and open the door for other countries.
“India, with over 1,00,000 online sellers and USD 5 billion in ecommerce exports, stands to benefit, but only if it quickly fixes bottlenecks in banking, customs and export incentives,” GTRI highlighted.
However, seizing this opportunity requires urgent reforms. The report stated that India’s current trade system is still geared toward large, traditional exporters, not small online sellers. For these ecommerce players, red tape often outweighs support, it added.
Bank Sector Reforms
The report added that the Indian banks remain a major hurdle. They struggle to handle the high volume and small-value nature of ecommerce exports. RBI rules allow only a 25 per cent gap between declared shipping value and final payment—too tight for online exports, where discounts, returns and platform fees often lead to larger differences.
“Raising this limit to 100 per cent and giving banks flexibility to approve legitimate cases would help. The RBI should also set strict service timelines and grievance mechanisms to ensure timely support for exporters,” GTRI added in its report.
Enhanced Access To Credit
GTRI highlighted that unlike large exporters, ecommerce sellers often lack access to affordable loans. On one hand, the big players get 7 to 10 per cent interest loans and purchase-order based financing. On the other hand, small online sellers pay 12 to 15 per cent and are left out of public credit programs. The report has suggested that including them under priority sector lending could help level the playing field.
Custom Modernisation Remains Crucial
With 24/7 automated inspections and easy-to-follow digital checklists for small exporters, the report added that India’s customs system must move online. “Courier-mode shipments should also be updated to accommodate terms like ‘Delivered Duty Paid (DDP),’ ensuring that paperwork matches real-world logistics and avoids unnecessary delays,” stated GTRI.
The US De Minimis Rule
The report highlighted that the US de minimis rule has been a key gateway for Chinese ecommerce companies like Shein and Temu to enter the American market. By raising the exemption limit from USD 200 to USD 800 in 2016, the US allowed low-cost Chinese goods to enter duty-free. This allowed Chinese sellers to offer ultracheap prices.
Over 1400 million low-value packets entered the US in 2024 from the world, with China alone exporting USD 46 billion worth of such goods, the report added.
