Indian E-Commerce Companies Poised to Outperform China Due to Tariffs

• The situation could improve if the government swiftly removes barriers in banking, customs, and export promotion.

New Delhi: U.S. tariffs on low-value e-commerce imports from China have opened up significant opportunities for Indian online exporters. If the government provides timely support, India could make substantial progress in this area.

According to the research institute Global Trade Research Initiative, with over 100,000 e-commerce sellers and current exports totaling $5 billion, India is well-positioned to fill the gap left by China—especially in sectors such as handicrafts, fashion, and home accessories, which involve customized, small-batch products.

On May 2, the U.S. will impose a 120% tariff on e-commerce exports from China and Hong Kong valued under $800, ending their duty-free entry. This move is expected to disrupt China’s supply chain and create opportunities for other countries to step in.

Chinese companies like Shein and Temu are key players in this market. In 2024, more than $1.4 billion worth of low-value packages arrived in the U.S. from around the world, with China accounting for $46 billion of that total.

India is well-positioned to fill this gap, particularly in small-batch products like handicrafts, fashion, and home accessories. However, India’s success in this space depends on the swift removal of barriers in banking, customs, and export promotion. Currently, India’s trade system still favors large, traditional exporters, leaving small online sellers at a disadvantage.

Indian banks also face challenges in managing the high volume and low-value nature of e-commerce exports. RBI regulations only permit a 25% discrepancy between the declared import value and the final payment, which is too stringent for online exports where discounts, returns, and platform charges often result in significant differences.