US e-com decision for China gainful chance for Indian exporters: GTRI

A New Delhi-based think tank recently said that the US crackdown on low-value Chinese e-commerce shipments has opened a ‘rare and potentially lucrative’ window for Indian exporters of items like handicrafts, fashion and home goods.

“With over 1 lakh e-commerce sellers and $5 billion in current exports, India is well positioned to fill the gap left by China—particularly in customised, small-batch products like handicrafts, fashion, and home goods,” according to a report released by the Global Trade Research Initiative (GTRI).

An Indian think tank has said that the US crackdown on low-value Chinese e-commerce shipments has opened a ‘rare and potentially lucrative’ window for Indian exporters of items like handicrafts and fashion.
But reforms are necessary to achieve this, it said.
Indian banks are a major hurdle for exporters that struggle to handle the high volume and small-value nature of e-commerce exports, it noted.

But reforms are a necessity to achieve this, it noted.

On April 2, American 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 up to $800 to enter the US without any duty—benefiting some US and Chinese companies.

Trump further raised the tariffs on China, including on e-commerce goods. From May 2, all such shipments from China and Hong Kong will face a 120 per cent import duty, ending their duty-free entry.

A per item duty will rise from $75 to $100 from May 2 to May 31. From June 1 onwards, the per item duty will go up further to $200.

The GTRI report said that though other countries retain de minimis privileges, the window of opportunity could be small, as the US administration has hinted at expanding these restrictions in the future.

India’s trade system now is still geared towards large, traditional exporters and not small online sellers. For these e-commerce players, red tape often outweighs support, the report observed.

Indian banks remain a major hurdle for exporters as they struggle to handle the high volume and small-value nature of e-commerce exports, it said.

E-commerce sellers often lack access to affordable loans. While big players get loans at 7-10 per cent interest and purchase order-based financing, small online sellers pay 12-15 per cent interest and are left out of public credit programmes. Including them under priority sector lending could help level the playing field, the report added.

Fibre2Fashion News Desk (DS)