Business & Finance

The Threat of the Chinese at the Indian Customs Dept.

china President Xi

China, the world’s second largest economy, has grown at a tremendous pace over the last few decades, ever since it opened up its economy to the world in the 1970s. While, in a way it is good news that an Asian country is emerging as one of the largest economies in the world, thereby lending more balance to the ever powerful western economies, the fact is that there is now enough proof that China is untrustworthy, dishonest and hungry for world dominance at any cost. The world has already taken too long to realize that China, with its disregard for international laws and open imperialistic ambitions, is a danger to world order.

Chinese firms are well known to use subversive means to achieve their objectives, which come at the cost of other nations. Take the most recent example of its telecom equipment and mobile phone maker Huawei, which was using its position to indulge in espionage and stealing security and trade secrets from different countries across the globe. Finally, Donald Trump’s America came down hard on Huawei and is batting for a complete ban on its services in the US and world over. A recent estimate suggests that Huawei is set to lose $ 30 billion this year because of trade problems with the US, but the second largest telecom brand in the world still expects to rake in $ 100 billion in revenue in spite of this, according to its CEO.

Taking another example close to home, it has recently come to the attention of customs authorities in India that Chinese e-commerce firms have been escaping customs duty and GST while shipping goods ordered by Indians via their platforms by claiming them as gifts. Indian customs regulations currently allow tax exemption on gifts sent to relatives in India by Indians living abroad up to a limit of ₹ 5,000. Indians living abroad usually send their relatives gifts on special occasions like Diwali or Birthdays. The customs act states that such gifts must be for personal use, there should be no payment made by the recipient in India and the value of the gift must not be more than ₹ 5,000 for it to be exempt from customs duty. Chinese firms have been taking undue advantage of this exemption and have been circumventing taxes by claiming these purchases as gifts.

Many Chinese entities are not registered as businesses in India thereby ruling out the scope for grievance redressal or returns by Indian customers. Several of such e-commerce sites display prices in Indian ₹ and do not even provide invoices when goods are delivered, and in cases where cash on delivery option is opted for, it made it even more difficult for investigators to follow the paper trail back to the source. China Post, the state owned official postal service of China was found to be heavily subsidizing packages shipped to India to keep costs lower and pay lower duties.

Chinese e-commerce sites such as Shein, Club Factory and AliExpress among others have been known to indulge in such unfair trade practices in which they have been carrying out commercial trade under the guise of gifts.

Such practices by Chinese firms have been hurting Indian businesses as goods being delivered in India without paying taxes make them much cheaper than similar products manufactured in India; with price difference in some cases being as high as 40%. In addition to causing revenue loss for the customs department, such practices, if unchecked over a period of time, can wipe out the small and medium enterprise sector in India.

Indian customs authorities have started a major crackdown on online purchase of goods from Chinese e-commerce platforms and many seizures have been made in recent months. The government has severely restricted movement of such goods through Mumbai and is now looking to start a similar crackdown across India and other ports including Chennai and Kolkata. In addition to the customs department, now even the post office department has been asked to scrutinise such purchases. Investigations revealed that at its peak anywhere around 2,00,000 orders were placed everyday through Chinese e-commerce platforms in India. After the crackdown, it has now come down to 1,20,000 orders a day. And, to top it all off, after the government has come down hard on such e-commerce players, Chinese firms have been employing Indian agents and importers to do their dirty work for them in India. Mumbai Customs has seized around 500 parcels of Sino India Etail, the official Indian seller for Chinese apparel maker Shien and sealed their warehouse in the city for undervaluing and wrongly declaring goods. Parcels of another local unit of a Chinese etailer, Club Factory, named Globemax Commerce India, have also been seized.

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