Volumes of small parcel exports from India to the US are down by 10-15 per cent with over 1.5 months gone by since the US rolled back exemptions and imposed duties on small parcels.
Exporters and trade facilitators observe that, despite most sellers absorbing the new duty within their margins and implementing only marginal price increases in some cases, the additional duty and heightened compliance checks have led to a 10-15 per cent decline in trade volumes. Shipments now take 4-5 additional days with the procedures at US Customs , but things are now settling on the logistics partners front with India Post also resuming postal services to the US, they add.
The US government suspended duty-free imports of products under $800 from all countries effective August 29 impacting small and medium-size exporters (both on marketplaces and D2C). Their shipments now go through US customs clearance and all goods valued at $800 or less are subject to tariffs ranging from 10-50 per cent. India’s annual estimated exports of small packets is around $5-6 billion.
Sarthak Duggal, Lead, E-commerce Vertical, Skydo, a cross border payments platform, says this is the time of the year when shipment volumes hit a peak given the Indian festive season, Black Friday and then Christmas, but volumes are still down. “In the first couple of weeks of September, it was a big drop in volume because all the logistics providers were figuring out how to enable the DDP (delivered duty paid) shipments,” he said. DDP refers to shippers prepaying duty to logistics partner, who then deposits it authorities on their behalf.
Interestingly, he sees a structural shift emerging in such small value exports.
“A lot of players were earlier sending out many individual shipments to fulfill their orders. Now we see sellers consolidating shipments, making bulk shipments to private warehouses in the US and then fulfilling the orders to their customers,” Duggal explains.
Stringent checks
Saurabh Goyal, co-founder and CEO of cross-border commerce platform Xindus, says the new duty levy and stringent compliance norms have slowed down processing of shipments from India to the US. While certain exporters with a strong value proposition are able to absorb the duties, it is tougher for smaller exporters if the product is replaceable among the US customers, he adds. “Earlier, the parcels were cleared as personal shipments and hence subject to lesser scrutiny but now we see more stringent checks leading to slightly longer timelines and struggles for smaller shippers,” he said.
Aditya Bhansali, Co-founder, Endless Stationery, a seller with around 70 per cent of exports to the US, says volumes have come down with some customers “still not having come to terms with the new duty” and shipments also taking 4-5 additional days. “We are trying to absorb it in our margins as much as we can,” he adds.
Amazon Global Selling, a programme that helps Indian sellers (manufacturer, reseller or an emerging brand) sell globally on Amazon, refused to specify any business impact of the new duties, but Srinidhi Kalvapudi, Head, Amazon Global Selling India, reiterated the programme’s commitment towards facilitating exports continues, and said they are confident of achieving $20 billion in e-commerce exports from India by 2025 through it. Amazon Global Selling has about 1.5 lakh exporters, and in the last 10 years, the cumulative export from India is $ 13 billion from 2015 to 2024.
