Tariff conflict presents opportunity for India’s e-commerce exports

GTRI sees a major opportunity for India to boost e-commerce exports as the U.S. ends duty-free imports from China. To capitalize on this, India must ease banking rules, cut transaction costs, digitize customs, and offer small exporters equal credit access.

The Global Trade Research Initiative (GTRI) has identified a key opportunity for India to boost its e-commerce exports following the U.S. decision to remove the duty-free import regime for low-value consignments (under US$ 800) from China and Hong Kong, effective May 2. These goods, sent via courier or other non-postal channels, will now attract full import duties—up to 125% in China’s case—while imports from other countries, including India, remain exempt. 

The report by trade policy think tank GTRI noted, “The US ‘de minimis’ rule has been a key gateway for Chinese e-commerce companies like Shein and Temu to enter the American market. Over 1,400 million low-value packets entered the US in 2024 from the world, with China alone exporting US$46 billion worth of such goods.” Shein is a major clothing retailer, whereas Temu offers deeply discounted consumer goods that are shipped directly to customers from China. 

However, GTRI also cautions that this window may be short-lived, as the U.S. may expand similar restrictions to other nations.

With over 100,000 online sellers and US$5 billion in e-commerce exports, India is well positioned to step into the gap left by China, especially in niche, small-batch categories like fashion, handicrafts, and home décor. But India must act quickly and address domestic hurdles to fully leverage this advantage.

One major challenge lies in banking regulations. RBI rules currently permit only a 25% discrepancy between declared shipment value and final payment—a limitation that fails to accommodate common e-commerce variations like platform fees, discounts, and returns. GTRI suggests increasing the permissible margin to 100% and allowing banks to approve justified cases.

High transaction costs also hurt small exporters. Reconciling each shipment can cost ₹1,500–2,000, often consuming a large chunk of profits. GTRI recommends waiving these fees for low-value exports and fully digitizing the reconciliation process. Customs procedures should also be made fully online with 24/7 automated inspections and simplified checklists. Additionally, courier-mode documentation should support “delivered duty paid (DDP)” terms to reduce delays.

The report also points out that e-commerce exporters should receive the same benefits as bulk exporters, including lower credit rates. Currently, small sellers face 12–15% interest rates compared to 7–10% for larger players and are often excluded from public financing programs.