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US Post Vs China & How India Imports
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In today’s edition — a look at India’s import threshold amid US postal service suspensions from China and Hong Kong; AI or not to AI; and will alcohol bottles now look like cigarette packets?
DECODE THE NEWS
Shein, Temu Hit As US Ends De Minimis. What Are India’s Rules Like?
In a dramatic twist to the ongoing tariff war between the US and China, the US Postal Service has shut down parcel services from China and Hong Kong to the US.
This decision follows the US’s termination of the de minimis rules, which had previously allowed goods valued under $800 to enter the country duty-free. In India, this value is Rs 5,000 or $60.
In the context of trade and customs, ‘de minimis’ refers to the minimum value of goods that can be imported without incurring any duties.
The rules came into force right away and the suspension will continue till further notice. While the move is to push for domestic production in the US, short-term consumers will feel the effects.
But in all of this, India could benefit, as it would from the other tariffs that Trump has imposed on China.
“There is a lag as manufacturing adapts. So, initially, there will be a shift in sourcing imports from other places. In that sense, India could stand to gain. The real question is how quickly we can tap into this market,” Dr Nisha Taneja, Professor and Lead for International Trade and Investment, Indian Council for Research on International Economic Relations (ICRIER) told The Core.
Since 2015, Amazon's Global Selling programme has onboarded 150,000+ Indian exporters, offering 400 million+ Made in India products worldwide, with the US as a key market. In 2023, Indian sellers hit nearly $3 billion in sales, $5 billion in 2024 and targets $20 billion in 2025.
India’s ‘De Minimis’ Rules
It’s a threshold set by each country that determines when customs duties and taxes should be applied to imported goods.
All World Trade Organisation (WTO) members are signatories to the Trade Facilitation Agreement, which includes a provision recommending that countries set a de minimis threshold for duty-free express shipments.
“This measure aims to simplify trade, acknowledging that for low-value shipments, the cost of collecting duties often outweighs the duty itself. Each country has the flexibility to determine its own limit, as the agreement doesn’t specify any concrete guidelines for setting the de minimis threshold,” Taneja said.
India’s de minimis threshold is significantly lower compared to many other countries. Goods valued at Rs 5,000 or less can be imported without incurring customs duties when shipped via courier or postal services.
When we look at a comparison with other major economies, the differences in de minimis thresholds are quite stark. Australia - AUD 1,000, European Union - €150, Canada - CAD 150, and the United States - $800.
So why does India’s threshold remain so low? “For us, duty collection and revenue are crucial. Our cost of collecting duties might not be that high. So, overall, we don't want to miss out on that revenue. Revenue is the primary factor we consider when setting the threshold,” Taneja said.
However, it’s important to note that even though customs duty might be waived for low-value goods, Goods and Services Tax (GST) may still apply, depending on the product category.
PODCAST
On Episode 500 of The Core Report, financial journalist Govindraj Ethiraj talks to Rajesh Nambiar, president of Nasscom (National Association of Software and Service Companies) as well as Rahul Mehta, Chief Mentor of the CMAI (Clothing Manufacturers Association of India).
Markets edge down with selling in consumer stocks.
Gold prices hit record highs on global trade uncertainty.
How India’s IT industry looks at DeepSeek and the potential.
What Indian apparel manufacturers can and cannot do in a global trade war.
Now Kia Motors gets slapped with a hefty tax notice for misdeclaring imports.
India to review and potentially lower import duties on 32 items coming to the US…will Tesla get its pound of flesh now?
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The conference is scheduled from February 11-14, 2025, in New Delhi.
CORE NUMBER
56.5
This is the Purchasing Managers’ Index (PMI) for India’s services sector in January, marking a decline from 59.3 in December and the slowest growth in over two years, according to HSBC's final India Services MI Index. The PMI measures business activity, with a reading above 50 indicating expansion and below 50 signalling contraction. HSBC said the slowdown was driven by weaker domestic demand, increased competition, and rising operational costs. While export orders surged to a five-month high, input costs—particularly wages and food prices—remained elevated, prompting businesses to raise prices. The dip in services PMI suggests moderating economic activity, which could impact employment trends and inflationary pressures in the coming months.
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FROM THE PERIPHERY
—🤖 OpenAI founder Sam Altman has AI dreams for India. During his second trip to the country, he said, “I see people in India are building with AI at all levels of the stack — chips, models, you know, all of the incredible applications. So, I think India should be doing everything. I think India should be one of the leaders of the AI revolution." This comes close on the heels of the launch of China’s DeepSeek, which had American AI stocks tumbling. Altman also said that India was an important market for OpenAI.
—⛔️ Speaking of AI in India, the finance ministry has asked its employees not to use tools like Altman-founded ChatGPT or DeepSeek because of security threats. Reuters reported that an advisory was shared with employees on January 29. It read, "It has been determined that AI tools and AI apps (such as ChatGPT, DeepSeek etc.) in the office computers and devices pose risks for confidentiality of (government) data and documents.” Other countries like Italy and Australia too have put restrictions on the usage of AI because of similar concerns.
—🛵 Ola Electric has launched the Roadster X series electric motorcycle, available in two variants—a 4.5 kWh model priced at Rs 1.05 lakh and a 9.1 kWh variant at Rs 1.55 lakh. Ola claims the larger battery can deliver a range of 501 km, a figure that remains untested until real-world reviews emerge. This launch comes as Ola Electric’s market share has sharply declined from 49% in June 2024 to below 19% in December, though it rebounded to 24.91% in January 2025. The 9.1 kWh battery pack, one of the biggest in the segment, signals a move to compete with premium players like Ultraviolette, but its long-term viability remains to be seen.
—🥴 India’s Food Safety and Standards Authority of India (FSSAI) is considering stronger health warnings on liquor bottles, The Economic Times reported. Since April 1, 2019, alcohol bottles in India have been required to display two warnings: "Consumption of alcohol is injurious to health” and "Be safe—don’t drink and drive." Companies were given a year to comply. The move to further tighten regulations aligns with global research, including a 2018 Lancet study, which states that no amount of alcohol is safe. Enhanced warning labels could help curb rising alcohol consumption, but implementation could face pushback from the liquor industry, which has historically resisted stricter regulations.
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✍️ Zinal Dedhia, Salman SH | ✂️ Rohini Chatterji | 🎧 Joshua Thomas