Ecom players wait & watch as no-duty regime winds up

India will have to figure out if President Donald Trump's decision to end a system that allowed low-value imports from China and Hong Kong to enter the US duty-free, will affect its booming ecommerce with the US.

- SHIVANI SHINDE & PEERZADA ABRAR

The White House, in a statement on Thursday (India) time, said, "Following the Secretary of Commerce's notification that adequate systems are in place to collect tariff revenue, President Trump is ending duty-free de minimis treatment for covered goods from the People's Republic of China and Hong Kong starting May 2, 2025 at 12:01 a.m. EDT."

The de minimis system allowed products and merchandise under $800 to enter the US without any duty and with minimal inspection. Chinese ecommerce companies used it to send merchandise directly to customers in the US.

The number of shipments using this system have swelled in recent years to reach 1.4 billion in 2024, according to a report by Reuters. Of such systems, almost 60 per cent came from China.

India is among 100 countries that used the system and it is too early to understand the impact its elimination will have on the country's ecommerce industry and small businesses.

India's de minimis threshold is ₹5,000 or $60, significantly lower than other countries, according to media reports.

Paresh Parekh, partner and retail tax leader, EY India, said that Indian ecommerce and direct-to-consumer (D2C) sectors mostly sell or list products manufactured in India or imported from countries, including from China. Therefore, the US tariffs may only have an indirect impact.