US tariffs on low value Chinese e-commerce shipments opens doors for Indian exporters: GTRI

According to the GTRI, with over 100,000 e-commerce sellers and USD 5 billion in current exports, India is well-positioned to fill the gap left by China--particularly in customized, small-batch products like handicrafts, fashion, and home goods.

But seizing this opportunity requires urgent reforms. India's current trade system is still geared toward large, traditional exporters--not small online sellers. For these e-commerce players, red tape often outweighs support.

On April 2, U.S. 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 upto USD 800 to enter the US without any duty -- benefiting Amazon and Chinese firms like Shein and Temu. Trump further raised the tariffs on China include on e-commerce Goods vide his April 9, executive order.

Talking about the needed reforms, the report says that banking should be reformed, as Indian banks remain a major hurdle.

The report added that the banks struggle to handle the high volume and small-value nature of e-commerce exports.

RBI rules allow only a 25 per cent gap between declared shipping value and final payment--too tight for online exports, where discounts, returns, and platform fees often lead to larger differences.

"Raising this limit to 100 percent and giving banks flexibility to approve legitimate cases would help, the report said.

It further highlighted the issues, such as bank fees, which create issues for the low-value exporters.

"Bank fees are also a problem. Reconciling each small shipment can cost Rs 1,500-Rs 2,000--sometimes half the shipment's value. These charges should be waived for low-value exports, and processes must go fully digital. The RBI should also set strict service timelines and grievance mechanisms to ensure timely support for exporters", the report added.

The report added that India's customs system must move online, with 24/7 automated inspections and easy-to-follow digital checklists for small exporters.

Courier-mode shipments should also be updated to accommodate terms like "Delivered Duty Paid (DDP)," ensuring that paperwork matches real-world logistics and avoids unnecessary delays, the report highlighted.

Going further, the report emphasized the need for a mechanism for better access to the credit.

"While big players get 7-10 percent interest loans and purchase-order-based financing, small online sellers pay 12-15 percent and are left out of public credit programs. Including them under priority sector lending could help level the playing field," the report suggested.

In addition, it highlighted the need to extend incentives for the exporters, adding that the extension of the advance authorization scheme, RoDTEP (Remission of Duties and Taxes on Exported Products), duty drawback, etc.