CURRENT AFFAIRS
CURRENT AFFAIRS
Description
On 29 August 2025, the United States officially ended its century-old De Minimis exemption, which previously allowed shipments valued under $800 per person per day to enter the country duty-free. This change has created significant disruption in postal and e-commerce trade between India and the US. In response, India Post suspended most mail services to the US from 25 August 2025. Under the new rules, all shipments are subject to customs checks and duties, impacting both businesses and individual consumers.
About De Minimis Exemption
The De Minimis exemption permitted low-value parcels to enter the US without paying customs duty. It applied to shipments below $800 per person per day, streamlining customs procedures and facilitating faster delivery for cross-border e-commerce. In fiscal year 2024, the US Customs and Border Protection (CBP) processed over 1.36 billion such shipments, helping exporters reduce compliance costs.
Reasons For Ending Exemption
The US government withdrew the exemption to increase tariff revenue and tighten import controls. The change also addresses issues of undervaluation, misdeclaration of goods, and security concerns. Announced by President Donald Trump on 30 July 2025, the new rules came into effect on 29 August 2025.
Impact On India Post And Postal Customers
India Post suspended bookings and shipment of most parcels to the US, except for documents and gifts under $100. Postal carriers cannot send shipments without proper duty collection and data exchange systems, affecting millions of Indians sending goods and gifts abroad. In cities like Coimbatore, nearly 15% of parcels were bound for the US, highlighting the scale of disruption.
Effects On Indian MSMEs And E-commerce
The change poses major challenges for Indian micro, small, and medium enterprises (MSMEs), particularly those exporting electronics, pharmaceuticals, textiles, and jewellery, which account for over 60% of India’s exports to the US. The previous Entry Type 86 customs process is now replaced by the Entry Type 11 system, which requires detailed product codes, valuations, and documentation. This increases compliance costs and the risk of shipment delays.
Challenges For Exporters
Businesses must now either absorb higher duties, reducing profit margins, or pass on costs to consumers, which may dampen demand. Exporters must revise pricing, shipping, and compliance strategies. At the same time, the change presents an opportunity to modernize trade practices and adopt advanced compliance systems, enhancing resilience and competitiveness in global markets.
Future Outlook
The Department of Post is actively monitoring the situation and working to restore services. Industry stakeholders are seeking clearer duty collection procedures and data-sharing protocols. The evolving US customs framework is expected to influence India-US trade dynamics in the coming months, requiring businesses to adapt quickly to maintain market access and growth.
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