Mastering Cross-Border Selling and Shipping into India | Decoding Cross-Border Ecommerce

Introduction

Welcome to the Decoding Cross-Border Ecommerce podcast by Zonos, where today we delve into the intricacies of selling and shipping products to India. The podcast episode features Clint Reiser and Aaron Grider sharing insights, experiences, and key considerations for e-commerce businesses aiming to expand into the Indian market.

Introduction

A Massive Opportunity

Establishing a good customer base in India is a wise move, given the country's emerging e-commerce market. With less than half the Indian population currently buying online, this is a market poised for growth. The increasing internet penetration and rising disposable incomes make India a lucrative destination for cross-border sellers.

Personal Experiences

A Taste of India

Both Clint and Aaron share personal anecdotes of their love for Indian food and travel experiences in India. Aaron recounts his brief visit to Bangalore and the cultural experiences that ensued, including his adventure on a go-kart track and dealing with the chaotic traffic, which involved dodging families on scooters and waiting for cows to move off the roads.

Entering the Indian Market

Tax and Duty

India imposes significant taxes and duties on imported goods, making it a costly destination for cross-border e-commerce. Here’s a breakdown:

Minimus Value

India charges duty and taxes regardless of the value of the goods.

Watch Out for Taxes

IGST (Integrated Goods and Services Tax): Typically 18%, but 28% on B2C e-commerce shipments.
Duty: Simplified at 35% for most shipments.
Social Welfare Surcharge: 10% of the duty.
Countervailing Duty (CVD) and Special Additional Duty (SAD): Apply to protect local industries.

Cost Calculation

If you're selling an $ 80 t-shirt with $ 20 shipping, the CIF (Cost, Insurance, and Freight) value would be $ 100. With all duties and taxes included, the final cost could nearly double the initial price.

Carrier Fees

Shipping carriers have additional fees:

Remote Area Surcharges: Range from $ 3 to $ 28 depending on the carrier.
Advancement Fees: Charged when the carrier advances payment to customs (approximately $ 10 for our example t-shirt).
DHL charges these fees differently and doesn't apply Indian taxes on them.

Strategic Considerations

Is It Worth It?

If you're serious about India, try offering your goods for sale to test the waters. High demand may justify putting inventory in-country, bypassing some of the exorbitant import costs.

Fraud Concerns

Although there is some risk of e-commerce fraud, it is not significantly higher than other emerging markets.

Key Takeaways

Selling in India is challenging due to high taxes, duties, and carrier fees, but the potential market size and growth trajectory make it a worthwhile venture. Businesses should offer products primarily to test demand and scale up by placing inventory locally if significant demand is evident.

Conclusion

India is a large, complex market with its own set of challenges and rewards. Understanding the intricate details of cross-border logistics, taxes, and duties will prepare you for success in this burgeoning economy.

Keywords

Cross-border e-commerce
India
Taxes and Duties
IGST
CIF Value
Remote Area Surcharge
Carrier Fees
Expansion Strategy

FAQ

Q: What is the average tax and duty cost on imported goods into India? A: The average tax and duty cost can add up to about 72% of the CIF value of the goods.

Q: Is it worth offering goods for sale in India despite the high import costs? A: Yes, offering goods for sale helps test the market demand. High demand might justify placing inventory locally to reduce import costs.

Q: How do carrier fees in India work? A: Carrier fees include remote area surcharges and advancement fees which vary by carrier. These fees can add $ 10-$ 28 on top of the shipping cost.

Q: How do duties and taxes apply to B2C shipments in India? A: B2C shipments are charged a simplified duty of 35% and an IGST of 28%.

Q: Are there additional services taxed in India? A: Yes, services like brokerage fees can be subjected to central (CGST) and state (SGST) taxes totaling 18%.

Q: Is e-commerce fraud a significant concern in India? A: While there is some risk, it is not significantly higher than other emerging markets.