President Donald Trump has decided to abolish the system of allowing imported imports from China and Hong Kong to come to the US without any duty. In such a situation, India will have to see what will be the impact on its growing e-commerce business with America.
The White House said in a statement on Thursday (Indian time), “After the Commerce Minister’s notification that there is adequate arrangement to collect the fee revenue, President Trump is finishing the D Minimis facility for the goods coming from EDT from EDT to Piplas Republic of China (PRC) and Hongkong at 12:01 pm on May 2, 2025.”
Under the D Minimis system, products and supplies worth less than $ 800 were allowed to enter the US with no fee and minimum inspection. Chinese e-commerce companies used it directly to send goods to customers in the US. According to the Reuters report, the number of consignments using this system has increased to 1.4 billion in recent years to 1.4 billion. About 60 percent of such a system is from China.
Impact on India
India is among the 100 countries that have used this system and at the moment it is too early to understand what will be the impact on the country’s e-commerce industry and small businesses. According to media reports, India’s D minimis limit is Rs 5,000 or $ 60, which is much lower than other countries. Paresh Parekh, partner and retail tax leader in EY India, said that Indian e-commerce and D2C (Direct-to-Consumer) areas are mostly sold or listed from other countries built in India or other countries including China. Therefore, American fee can only have indirect effect.
Parekh told Business Standard, ‘However, in the case of aspects such as alleged aspects of consumption, etc. and low-value imports from China and Hong Kong etc., the US could have a major impact on the US D2C e-commerce due to the US ending the D Minimis system. He said, ‘There is a need to analyze its indirect and direct impact on Indian e-commerce. It also needs to be seen whether the Indian government would like to change the Indian D-Minimis border which is already very low already.
Some of the industry experts said that in the long term, the counter duty of US President Donald Trump could affect the e-commerce sector in India, especially through increased costs and changed behavior of consumer. For example, this fee may increase the cost of Indian goods exported to the US. Decreased spending capacity may reduce demand for imported goods. E-commerce businesses dependent on foreign trade to foreign businesses may lead to disruption in supply chains due to increase in fee and may affect their margin. Parekh said that changes in US duty for imports in the US and D-Minimis rules for US imports can make goods expensive in the US and change the nature of American consumption.
Parekh said, ‘Indian D2C and e-commerce selling goods in India are either manufactured in India or imported from China etc. Therefore, while US consumers may face increased prices due to American fees, until the sellers bear the burden of margin, the US fee should not have a direct impact on the prices of goods in India and there is no possibility of a huge change in Indian consumer behavior.
First Published – April 3, 2025 | 11:50 PM IST
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