July , 2019
No more easy profit for Chinese e-retailers in India
13:49 pm

Kuntala Sarkar

After Walmart’s $16 billion acquisition of Flipkart and Amazon’s $5 billion gain from India, the Narendra Modi government has announced changes in its policy for the e-commerce sector.

The government has been controlling the ‘deep discount’ offered by various e-commerce players. Now it is attempting to control Chinese e-commerce companies who are misusing India’s customs rules. It has come down hard on Alibaba and other Chinese e-commerce platforms in its attempt to make the sector more transparent.

Since last year, the Indian government is looking regulate the e-commerce sector by asserting international trade agreements. According to industry sources, this can be also perceived as an attempt to promote India’s domestic e-commerce companies.

Shipments from Chinese e-commerce platforms including AliExpress, Shein, and Club Factory will be restricted. The government policy of exemption of gifts of up to `5,000 from GST duties was being misused by certain Chinese e-commerce companies. Clothes, fashion accessories, and electronic gadgets were the leading items in this front.

Why India is being strict

India’s e-commerce market is expected to hit $50 billion at the end of 2022 and is poised to reach $200 billion by 2026. This indicates a high growth projection. With 100 million new internet users every year, the Indian market is being driven by Flipkart, Paytm, and Amazon. Previously, around 2,00,000 orders were placed every day through Chinese e-commerce platforms in India that escaped custom duties. After a major crackdown, this has come down to around 1,20,000 orders per day. The government wants all major ports across India to intensify their checks to stop such practices. Chinese e-retailers which were organising deliveries in India under the guise of gifts to avoid custom duties were posing serious challenges to domestic e-commerce platforms. The Chinese e-commerce players were thus offering products at a much lower price, which was affecting Indian e-commerce players. Recently, the government has made it mandatory for all Chinese e-commerce platforms to register domestically. After sending letters to tax officers and customs officers, the government is now ordering its postal services and courier companies to monitor shipments from China.

The US has raised tariffs on goods imported from China. International trade between the two countries is expected to slow down. At the same time, India is also taking moves against Chinese e-commerce players in a bid to protect its own e-commerce players. It can be expected that trade relations between India and China will also slacken.

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