Indian govt cracks down on Alibaba, says goods can’t be shipped as ‘gifts’

This follows reports that platforms like AliExpress, Shein, Club Factory are selling goods marked as gifts to avoid Customs duties (now collected as GST).

Atom Chinese Goods

While there is a battle going on between the online and offline retailers in India, there are foreign online entities like Alibaba’s AliExpress who are delivering products to Indian customers. Many of these packets are found to be marked as gifts but the government is putting an end to this.

This step follows reports from the Customs authorities that several sellers on platforms like AliExpress, Shein, Club Factory are selling goods to buyers in India and then sending them by courier marked as ‘Gifts’. This is done to avoid Customs duties (now collected as GST). Genuine gifts when imported into India up to a value of Rs 5,000 are exempted from duties/taxes.

But the foreign post department and the Customs found that multiple deliveries bearing the same address are being delivered clearly making out a case for a scam. Customs found 15kg parcels being imported as gifts and the value declared at just Rs 3,000. To remain within the Rs 5,000 limit that includes the courier charges, the seller indicates the courier charges to be Rs 1200 for a 15kg parcel, whereas the normal courier for overseas packages is that much for a 1kg packet. Without doubt, these were traders importing the goods to do trading.

Besides the price advantage which buyers of these products in India enjoy on these Chinese online platforms (claimed to be 50% cheaper), there are also fears expressed on spurious stuff like cosmetics and food items being brought into the country through this route. This is what the government has now stopped by imposing the restrictions.

The demand from the domestic trade is to insist on foreign-based e-tailers to also obtain a registration to sell to Indian buyers and to include the tax part at the point of sale itself.

The government is now seized of the issue but it may take time for a proper legislation or order to be formally issued. Till then, the Customs and other enforcement agencies will have to do their own interceptions and act on them.