How Is India Planning To Curb Misuse of "Gifting" Policy By Chinese E-commerce Vendors

CBDT is considering to do away with the policy which allowed people to receive duty-free 'gifts and samples' from abroad
How Is India Planning To Curb Misuse of "Gifting" Policy By Chinese E-commerce Vendors
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In a bid to crackdown on Chinese e-commerce vendors importing products masqueraded as “gifts” to avoid duties, the Indian government is now planning to completely scrap the rule which allowed people to receive duty-free ‘gifts and samples’ valued at and under INR 5,000 from foreign countries.

According to an  Economic Times report, the Central Board of Indirect Taxes and Customs was earlier considering to place a cap on the number of gifts that one can receive. Under this plan, one individual could receive four gifts only. However, the tax department has now decided against the plan as its implementation would be difficult.

The government began taking measures against the China-based e-commerce companies from November 2018. Earlier this year, reports revealed that customs officials at  Mumbai, Delhi and Bengaluru cargo ports had begun to stop the entry of such gifts in India. These three major ports constitute 90per cent of such imports.

What Is The Issue?

According to current rules, Indians can receive an unlimited number of duty-free free samples and gifts from overseas valued up to INR 5,000 via couriers. However, this rule is being allegedly misused by China-based e-commerce companies who are importing their low priced products in India under the guise of a gift. According to reports, players such as Shein and ClubFactory have been allegedly under-billing their shipments to import their products in the country without paying the needed duties.

Earlier in June, it was reported that the Mumbai customs had seized around 500 packages which were to be delivered to customers of Shein, and Club Factory. 

The issue came under the limelight after Swadeshi Jagran Manch (SJM), the economic wing of Rashtriya Swayamsevak Sangh (RSS) pointed out last year that e-commerce companies such as Club Factory and Shein receive more than 200K orders per day in India and have been delivering goods via couriers and postal gift shipments in order to evade taxes.

In a bid to prevent the misuse of the law, the Indian government has been considering several legal changes such as placing a cap on the number of gifts. According to the ET report, the current plans to change the policy may not sit well with the international business communities and global policymakers.

Indo-China Trade Tensions

Trade tensions between China and India have been intensifying with time. After the horrifying Pulwama terror attack in February SJM had reportedly written to Prime Minister Narendra Modi seeking ban on China-based social media apps, e-commerce companies and telecom equipment.

Popular Chinese social media apps such as TikTok and Helo, owned by ByteDance have been pulled up by the Indian government due to sharing unlawful content and hate speech which may lead to security risks 

Earlier in March, reports said that the Indian government is studying issues related to Chinese telecom gear makers after several countries alleged that the companies had plans to use the equipment to breach global security.

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