Big Blow For Shein, Club Factory As Import Of Goods As Gifts Barred

The exceptions are for life saving drugs and rakhi and the import of goods payment of full applicable duties is allowed. In June, Mumbai customs had seized about 500 packages of Shein and Club Factory.

At a time when Indian ecommerce companies are awaiting clarity on draft policy while also juggling it with issues of deep discounting etc, the government has now turned its attention again towards Chinese ecommerce companies such as Club Factory and Shein, who had been caught importing ecommerce orders as gifts to avoid paying duty.

In a notification on Thursday (December 12), Directorate General of Foreign Trade under the ministry of commerce prohibited the import of goods under ‘gifts’.

“Import of goods, including those purchased from ecommerce portals, through post or courier, where Customs clearance is sought as gifts, is prohibited except for life-saving drugs/medicines and Rakhi (a sacred thread tied by a sister to her brother on occasion of Raksha Bandhan).”

The notification further clarified that a gift with rakhi is also prohibited. Hence, the import of goods as gifts with “payment of full applicable duties is allowed”.

Sachin Taparia, founder and chairman, LocalCircles says, "This will put an end to the misuse of India's gift clause by many sellers associated with some of the China-based ecommerce apps, who were using this route to send commercial shipments to India and evading duties and IGST."

"We also hope that with this rule in place, some of the China-based ecommerce platforms will reduce reliance on imports from China and start working with India-based MSMEs which is good for domestic industry," said Taparia.