India is one of the most lucrative markets for e-commerce portals. Be it Flipkart, Amazon or Walmart, none can deny that our growing economy and rising digital awareness can make huge profits for them. Amongst such portals, Chinese portals are growing their consumer base rapidly in India. A lot of Chinese websites like Shein, Club Factory and Romwe etc. have established a strong foothold in Indian markets.
The government of India is quite alarmed by their method of operations and these apps/ websites might soon become a thing of past in India. The govt. of India is all set to keep a tab on these websites in Indian markets due to the following reasons.
Here is the Reason:
Over the past year, these portals have developed their own consumer base in India. China being the manufacturing hub provides goods at a much cheaper price than the Indian markets. These products are quirky and cheap due to which consumers don’t mind a lot in case their expectations are not fulfilled. This, however, reduces the sales and in turn production of Indian commodities due to less demand.
Another concern is that these websites do not pay any duties to the Indian government. They ship directly from China using the China post. The items sent to India are marked as gift items so, they easily skip the GST as well as import duty to our government.
When Did this all come-up?
Indian government exempts any gifts having worth of up to Rs 5,000 that are sent from abroad. The Chinese companies have allegedly been doing this, according to a report by The Times of India. The law aimed to facilitate NRIs in sending gifts back home without import duties. However, this rule is being used to evade taxes, which results in revenue loss to the country. This also lowers the cost of items and affects the sale of Indian commodities since they are paying the taxes.
Another allegation that has been surfaced against Chinese shopping portals is that they do not display the maximum retail price on the boxes. According to the Packaged Commodities Rules 2017, it is mandatory to display maximum retail price (MRP). Thus there is no check or attestation about the discounts being given by them.
Economic Times has reported that the Indian Department of Industrial Policy and Promotion had proposed capping purchases of products from Chinese e-retailers and apps at four per buyer per year, citing senior officials. If implemented it can be a major blow to these portals in India.
Although cross-border e-commerce sales occupy only a small portion of Indian online sales at present and the practice is still at the basic level, it is an unstoppable trend and it is time for the nation to open its mind, said Huang Rihan, executive dean at the Beijing-based Digital Economy. Huang said, “It is very absurd and senseless to recommend the cap should be four products per year per buyer.”
“If India takes a move to set such caps, the country is bringing damage to its own newly emerging economy,” he added.
This, on the other hand, can be a bad news for Chinese giant Alibaba.com. The company has invested in multiple logistics and money payment companies with the aim of claiming a major stake in the flourishing Indian market.