Shein, Temu Hit As US Ends De Minimis. What Are India’s Rules Like?

Editor’s Note: In our February 6 edition, we reported on the US Postal Service’s (USPS) decision to suspend inbound mail and packages from China and Hong Kong. However, as per the latest update, the USPS has reversed its decision and will continue accepting shipments from these regions.

In a dramatic twist to the ongoing tariff war between the US and China, the US Postal Service has shut down parcel services from China and Hong Kong to the US.

This decision follows the US’s termination of the de minimis rules, which had previously allowed goods valued under $800 to enter the country duty-free. In India, this value is Rs 5,000 or $60.

In the context of trade and customs, ‘de minimis’ refers to the minimum value of goods that can be imported without incurring any duties.

The rules came into force right away and the suspension will continue till further notice. While the move is to push for domestic production in the US, short-term consumers will feel the effects.

But in all of this, India could benefit, as it would from the other tariffs that Trump has imposed on China.

“There is a lag as manufacturing adapts. So, initially, there will be a shift in sourcing imports from other places. In that sense, India could stand to gain. The real question is how quickly we can tap into this market,” Dr Nisha Taneja, Professor and Lead for International Trade and Investment, Indian Council for Research on International Economic Relations (ICRIER) told The Core.

Since 2015, Amazon's Global Selling programme has onboarded 150,000+ Indian exporters, offering 400 million+ Made in India products worldwide, with the US as a key market. In 2023, Indian sellers hit nearly $3 billion in sales, $5 billion in 2024 and targets $20 billion in 2025.

India’s ‘De Minimis’ Rules

It’s a threshold set by each country that determines when customs duties and taxes should be applied to imported goods.

All World Trade Organisation (WTO) members are signatories to the Trade Facilitation Agreement, which includes a provision recommending that countries set a de minimis threshold for duty-free express shipments.

“This measure aims to simplify trade, acknowledging that for low-value shipments, the cost of collecting duties often outweighs the duty itself. Each country has the flexibility to determine its own limit, as the agreement doesn’t specify any concrete guidelines for setting the de minimis threshold,” Taneja said.

India’s de minimis threshold is significantly lower compared to many other countries. Goods valued at Rs 5,000 or less can be imported without incurring customs duties when shipped via courier or postal services.

When we look at a comparison with other major economies, the differences in de minimis thresholds are quite stark. Australia - AUD 1,000, European Union - €150, Canada - CAD 150, and the United States - $800.

So why does India’s threshold remain so low? “For us, duty collection and revenue are crucial. Our cost of collecting duties might not be that high. So, overall, we don't want to miss out on that revenue. Revenue is the primary factor we consider when setting the threshold,” Taneja said.

However, it’s important to note that even though customs duty might be waived for low-value goods, Goods and Services Tax (GST) may still apply, depending on the product category.