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Modi govt cracks down on Chinese e-commerce firms; Shein, Club Factory likely to get hit

The government's crackdown came after it found a lot of Chinese e-commerce vendors misusing the provision that allowed gifts of up to Rs 5,000 intended for personal use to enter India as there is no customs duty being levied on them presently

twitter-logoBusinessToday.In | October 16, 2020 | Updated 08:59 IST
Modi govt cracks down on Chinese e-commerce firms; Shein, Club Factory likely to get hit

The Central government has come down heavily on Chinese e-commerce companies such as Club Factory and Shein which have been caught using the "gift" route to export orders to avoid paying customs duty.

These companies will now have to pay the duty, even on "gifts and samples" valued at under Rs 5,000, except life-saving drugs and rakhi.

The Directorate General of Foreign Trade (DGFT) in its notification on December 12 (Thursday) banned the import of goods under "gift" route.

Also Read: Learnings from China's walled-gardens of e-commerce

"Import of goods, including those purchased from e-commerce portals, through post or courier, where Customs clearance is sought as gifts, is prohibited except for life-saving drugs/medicines and Rakhi (but not gifts related to rakhi," DGFT said in its notification.

"Import of goods as gifts with payment of full applicable duties is allowed," it added.

The government's crackdown came after it found a lot of Chinese e-commerce vendors misusing the provision that allowed gifts of up to Rs 5,000 intended for personal use to enter India as there is no customs duty being levied on them presently.

Also Read: Alibaba IPO: Chinese e-commerce giant raises $12.9 billion

Chinese e-commerce companies such Ali Express, Club Factory and Shein have been the largest users of this route.

This move by the government is aimed at checking the tax evasion by Chinese e-commerce platforms. In June this year, 500 parcels of Shein and Club Factory were seized by the Mumbai courier terminal, according to a report in the Economic Times. After this, Shein had to partially shut down its India operations.

Also Read: FIR against Club Factory directors, CFO for selling 'fake' products

Also Read: Govt mulls restrictions on purchases from Chinese ecommerce players: Report

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