After gifting route, Chinese e-sellers cut invoice price

BENGALURU: Following the government’s clampdown on Chinese e-commerce companies and sellers allegedly sending goods as gifts, some Chinese firms are now circumventing the current set of laws by undervaluing the products being sold to Indian consumers on their invoices. According to a senior excise official in Mumbai, the companies are recording as much as 50% less pricing on the final invoice compared to the listing on the online platforms.

Courier Bill of Entry, commonly known as CBE-13, which allows import of goods valued up to Rs 1 lakh, is being used by the companies to evade duties since the invoices show reduced price. Essentially, the reduced prices would eventually show lower duties that need to be paid on these products.

Sellers on Chinese e-commerce companies like Club Factory, Shein or Ali Express have been exploiting regulatory loopholes that resulted in homegrown traders complaining about the issue to the government last year. Sources added post offices are now also being told to scrutinise these shipments coming from China.

“We have tracked a bunch of shipments coming from Chinese e-commerce companies and found the invoice price records are significantly lower than the actual price of the product on their platform. The idea is to value it as low as possible so that you pay minimum duties and they can leverage their pricing accordingly,” the senior excise official based in Mumbai said. According to him, other key entry points of such commercial goods entering India have been alerted as well.

“AliExpress is a marketplace and forbids illegal activities by third-party online sellers on its platform. Globally, AliExpress has strict measures in place to take action against sellers that violate any local laws of the countries in which it operates.” an AliExpress spokesperson said.

When contacted, Shein and Club Factory did not respond to TOI’s emailed queries. In January, Alibaba had told TOI it had penalised sellers who were evading taxes.

Citizens’ engagement platform Local Circles noted that volumes of commercial products coming to India as gifts via Mumbai have gone down by almost 60% in the last three months.

A major reason for Indian traders protesting against Chinese sellers is due to the pricing disparity it triggers. Chinese goods are typically cheaper than many other branded or non-branded goods sold by Indian sellers. The evasion of duties adds another layer of price reduction, which gets passed on to the consumers, slashing the final price further. This makes it hard for Indian merchants to compete with Chinese rivals. Owing to the recent political developments, Chinese companies or their products are being seen critically by some industry stakeholders.

The government’s move to go for a tighter vigil on the ‘gifting’ route has seen volumes of such products coming to India going down by a significant margin, the official said, requesting anonymity. The government allows goods up to Rs 5,000 to be sent as gift, including the courier fee. The draft e-commerce policy has recommended all such parcels should be banned from being sent as gift, except life-saving drugs.

“You won’t send 30-40 kg of ‘gifts’ to your friend or family which will shoot up the end-price before receiving the gift,” the excise official added.