India to rein in China’s gift horse

Beware of Chinese bearing gifts, or rather Chinese e-commerce companies bearing gifts. India’s government, worried that many of China’s online merchants are in effect abusing this country’s no-cap rule on duty-free gifts, is considering setting an upper limit on the number of overseas gifts any citizen can receive in a year.

Officials, who spoke off record, told ET that the government has begun a review of customs norms governing gifts, and that changes may be introduced in the upcoming budget, which is to be presented on July 5.

“Norms are being reviewed… There is a growing view that a tighter framework is needed,” said a government official.

A cap on the number of overseas gifts can be enforced by linking receipts to a citizen’s Aadhaar or passport number. Under current customs norms, free samples as well as gifts from overseas persons up to the value of ₹5,000 can be received duty-free in India via couriers. There is, however, no cap on how many gifts an individual can receive annually. And it’s this provision that’s being exploited by overseas ecommerce outfits, especially those from China. There have been reports of individuals receiving packages on a daily basis, said the official quoted above. Using the gift route allows overseas ecommerce players to avoid import duties, giving them an unfair advantage over firms that follow customs norms. Local ecommerce companies had earlier sent representations to the government on the issue.

Small Courier Firms Ignore KYC Norms

Courier service providers delivering such packages are required to carry out know-your-customer (KYC) checks of the recipients. But smaller courier companies frequently ignore these norms, officials said. Therefore, the government may also look at further tightening the KYC norms.

The need for a broader policy, officials said, stems from the limited impact of the narrow-focussed regulatory action undertaken so far.

In January this year, one zone of the Mumbai customs commissionerate cancelled registrations of courier companies that did not comply with KYC norms. It also ruled that the ₹5,000 limit on the gift value will include the courier charge. But the result was rerouting of such packages via other points of entry.