A sudden suspension of India’s postal consignments to the United States has exposed the fragility of global trade when regulatory shifts outpace operational readiness. Following Executive Order No. 14324, issued by Washington on 30 July 2025, the US withdrew its de minimis exemption on goods valued under USD 800, effective 29 August. This measure, enforced under the International Emergency Economic Power Act (IEEPA), means that all postal consignments—regardless of value—will now attract duties.
In response, India’s Department of Posts halted the booking of US-bound parcels from 25 August, except for letters, documents, and gifts worth up to USD 100. The move reflects not only regulatory uncertainty but also the inability of carriers and postal operators to comply with the yet-undefined mechanisms for duty collection and remittance demanded by US Customs and Border Protection (CBP).
While the measure appears technical, its implications for air cargo, express logistics, and bilateral trade flows between India and the United States are significant. For freight forwarders and airlines, the abrupt policy change creates uncertainty in one of the fastest-growing long-haul corridors, raising questions over competitiveness, compliance, and long-term supply chain resilience.
A policy shift with global trade repercussions
The United States was India’s largest single trading partner in 2024, with bilateral goods trade exceeding USD 120 billion, according to India’s Ministry of Commerce. Within this, a large share of consignments moving through air freight are low-value, high-volume goods such as textiles, handicrafts, electronics accessories, and jewellery. Many of these flows relied on the duty-free de minimis threshold, which had enabled Indian micro, small and medium-sized enterprises (MSMEs) and direct-to-consumer exporters to tap into US demand without facing prohibitive customs charges.
WorldACD data shows that India–North America freight volumes rose by 14% year-on-year in the first half of 2025, driven largely by e-commerce demand. The US exemption’s removal directly affects this segment, fundamentally altering cost structures for exporters and creating operational challenges for postal and express networks.
Air cargo linkages: postal flows as bellyhold lifelines
Postal shipments may represent a smaller share of trade by value, but their contribution to air cargo networks is disproportionately important. According to ICAO, international postal shipments account for 10–12% of global air freight by tonnage. On the India–US corridor, postal consignments provide consistent volumes that help stabilise bellyhold utilisation, particularly on passenger aircraft.
By suspending postal flows, India Post has disrupted a portion of traffic that not only sustained airlines’ cargo revenues but also complemented express and freight forwarder operations. Reduced postal uplift could lead to weaker load factors, prompting airlines to adjust pricing for remaining cargo capacity. Freight forwarders, particularly those serving SMEs, may see rising competition for space on freighter aircraft, increasing rates across the board.
This has broader implications for trade policy. Logistics inefficiencies already add an estimated 14% to India’s trade costs, compared with 8–10% in developed markets (World Bank). New customs-related friction risks further widening that gap.
Freight forwarders and express operators: caught in transition
For freight forwarders, the immediate effect is twofold. On the one hand, exporters unable to access postal channels may divert volumes towards express or commercial air freight, potentially boosting forwarder activity. On the other hand, the absence of clear customs processes for duty collection introduces compliance risks and administrative burdens that could undermine profitability.
Express operators, meanwhile, face a delicate balancing act. The Express Industry Council of India (EICI), which in August published a report with KPMG projecting the express sector to double to USD 22 billion by 2030, warned that unclear frameworks risk eroding India’s e-commerce competitiveness. As Ministry of Communication Govt. of India, noted: “Express and postal services play a complementary role in enabling MSMEs and exporters to reach overseas customers quickly. Any uncertainty in customs rules risks discouraging small exporters and pushing up costs.”
Without predictable customs regimes, express and freight players may be forced to redesign networks, absorb higher costs, or pass them on to exporters, threatening the viability of cross-border small consignments.
The MSME dimension: competitiveness at stake
The disruption could be most damaging for India’s MSMEs, which contribute around 30% of GDP and more than 40% of exports (World Bank). Many rely on low-value postal shipments to reach US consumers, taking advantage of the now-abolished de minimis provision.
The new duty framework could make Indian products less competitive. A USD 200 handicraft exported from Jaipur to New York, previously exempt, will now attract duties, narrowing margins. By contrast, exporters in Mexico or Canada, benefiting from preferential trade agreements under the USMCA, retain tariff advantages in the US market.
This raises broader policy questions for New Delhi. If the regulatory environment discourages small exporters, India risks losing ground in cross-border e-commerce, which IATA projects will grow at 15% annually through 2030. Policy intervention may be required, potentially in the form of targeted export subsidies, simplified compliance processes, or accelerated bilateral trade negotiations with the US.
Strategic implications for bilateral air trade
The temporary halt underscores the interconnectedness of postal flows with wider air cargo resilience. For US-bound carriers, interline agreements that routinely included postal consignments are now compromised. Several carriers have already cited “lack of operational and technical readiness” to act as duty collectors under CBP’s proposed rules.
The suspension also raises questions about the scalability of US–India air corridors. India has ambitions to position itself as a regional air cargo hub, with major investments in Delhi, Mumbai, Bengaluru, and Navi Mumbai airports. If postal and e-commerce flows—the backbone of future demand—are undermined by regulatory uncertainty, investor confidence in these hubs may be tested.
Moreover, the disruption could influence transshipment dynamics. Competing hubs in Dubai, Doha, and Singapore may absorb displaced flows, particularly if they can offer smoother customs clearance and integrated express handling.
Policy takeaways: lessons for air cargo
The episode highlights several key takeaways for air cargo policymakers and industry leaders:
- Customs harmonisation: Greater alignment between India Post, USPS, and CBP is critical to restore predictability and avoid regulatory fragmentation.
- Infrastructure readiness: Airports will need to integrate express and postal handling with customs digitisation to manage evolving compliance requirements.
- SME support: Small exporters require policy cushioning against sudden tariff shocks, possibly through facilitation measures or financial support.
- Air cargo diversification: Airlines and freight forwarders must reduce dependency on postal flows by diversifying cargo mixes and investing in digital trade documentation.
- Sustainability lens: Any policy response should align with sustainability goals, given that postal and express deliveries are closely tied to growing e-commerce-related carbon emissions.
Outlook: a test of resilience in trade corridors
What began as a regulatory amendment in Washington has become a stress test for India’s air cargo and logistics system. It illustrates how policy shocks can ripple through supply chains, affecting not only exporters and postal services but also airlines, forwarders, and airports.
As India and the US deepen their strategic and commercial ties, resolving the postal impasse will be essential to sustaining the momentum of bilateral trade. For the air cargo industry, the disruption is a reminder that resilience depends as much on regulatory agility as on infrastructure or fleet capacity.
In the months ahead, the key question will be whether both governments can rapidly harmonise customs processes to restore the flow of postal consignments. Until then, freight forwarders, airlines, and exporters alike will navigate an environment marked by uncertainty, higher costs, and heightened competition for capacity—conditions that could reshape one of the world’s most dynamic air trade corridors.