The United States has officially ended its century-old De Minimis exemption from 29 August 2025, a move that has disrupted postal and e-commerce trade between India and the US. The rule earlier allowed shipments valued under $800 per person per day to enter duty- and tax-free. With its withdrawal, all consignments must now undergo stricter customs checks and duties, affecting exporters, businesses, and consumers alike.
What Was the De Minimis Exemption?
The De Minimis exemption simplified customs clearance for small parcels, encouraging cross-border e-commerce. Goods valued below $800 per person per day entered the US duty-free, reducing compliance costs and ensuring faster delivery. In FY 2024, the US Customs and Border Protection processed over 1.36 billion such shipments.
Why the US Withdrew It
The exemption was removed to boost tariff revenues, curb undervaluation, and tighten import monitoring. Announced by President Donald Trump on 30 July 2025, the decision took effect from 29 August. The government cited revenue, security, and trade compliance as key reasons.
Disruption for India Post
Anticipating the change, India Post suspended most mail services to the US from 25 August 2025, except for documents and gifts below $100. Without a clear framework for duty collection and data sharing, carriers were unable to process US-bound parcels. The suspension has hit millions of Indians sending gifts and goods abroad. In cities like Coimbatore, nearly 15% of parcels were destined for the US, highlighting the scale of impact.
Blow to Indian MSMEs and E-commerce
Indian MSMEs—major exporters of textiles, jewellery, pharmaceuticals, and electronics—are among the worst hit. These sectors contribute over 60% of India’s exports to the US. With the exemption gone, all shipments now attract duties. The simple Entry Type 86 process has been replaced by the more complex Entry Type 11, requiring detailed product codes, valuation, and higher compliance costs, increasing delays and reducing profit margins.
Challenges and the Road Ahead
Exporters now face a dilemma: absorb higher costs or pass them on to US buyers, risking reduced demand. While the transition is disruptive, it also pushes businesses to adopt stronger compliance and digital trade systems.
The Department of Posts is monitoring developments and exploring solutions to resume services. Industry stakeholders are seeking clearer duty frameworks and improved data exchange protocols. As US customs evolves, Indian businesses will need to adapt swiftly to safeguard market access and sustain growth.