I Geo-Economics & ChokepointsSouth Asia
Former customs chief says the White House transshipment charge unfairly targets India
- Institution
- The Federal
- Author
- Najib Shah
- Country · language
- India · English
- Affiliation
- Independent digital publication
Summary
Najib Shah is the retired chairman of India's Central Board of Excise and Customs (CBEC). Writing in The Federal on 28 October, he takes aim at the White House report on the 'Great Transshipment Scam' published in August 2026. The report links 40 countries to the risk of illegal transshipment and places India in the riskiest tier 1. It estimates US tariff losses at between 40 and 303 billion dollars. It also claims that 67 billion dollars of goods were routed through India, Mexico and Vietnam, costing 28 billion dollars in tariffs. Shah notes that these figures are not broken down by country.
In the author's view, the report offers no evidence beyond the fact that imports from China fell while imports from other countries rose. Shah argues that China adapted by shifting to exports of intermediate goods and components. Sufficient value added and a change in tariff heading can legitimately satisfy rules of origin. He points out that the 2013 Bali Trade Facilitation Agreement recognises transshipment, and that the United States signed it. Shah proposes that penalties fall on importers who misdeclare origin rather than on countries. He also suggests US customs examine India's 2020 CAROTAR rules on origin verification.
Blind spot
The author is a former Indian customs official and offers no data of his own on the real share of Chinese intermediate goods passing through Indian ports. His example of pump exports above 2 billion dollars rests on a single sector. He does not discuss the possibility that Washington is using tariffs as leverage against India, or the link to the ongoing trade negotiations.
Talay assessment
Bottom line
The transshipment charge is becoming a way to extend US tariffs on China to third countries, and keeping India in tier 1 adds pressure at the trade table. Shah's defence of rules of origin is legally strong. But until the report's 67 billion dollar claim is broken down by country, the dispute will be settled by bargaining rather than evidence. The most likely path is India adding origin verification commitments to the trade agreement.
Likely effects
- Indian exportsNegative1–6 months
A tier 1 risk rating raises the prospect of extra inspections and delays at US customs for export lines heavy in intermediate goods, such as pumps and compressors.
- Trade negotiationsUncertainWeeks
Rules of origin become a new bargaining item in the first-tranche agreement with Washington.
- Supply chainsNegative6 months+
'China plus one' production built on Chinese components gets costlier if value-added documentation requirements tighten.
Possibilities, ranked
- 1Settlement through origin commitments55%
India commits to origin verification and information sharing, and transshipment becomes a chapter of the trade agreement.
Watch: Clauses on rules of origin and customs cooperation in the US–India agreement text
- 2Product-level measures30%
Washington imposes extra tariffs or inspections on specific Indian intermediate goods, citing transshipment.
Watch: A new US Customs enforcement notice on Indian-origin pumps and compressors
- 3The issue fades15%
The report never turns into concrete enforcement and the dispute stays rhetorical.
Watch: No new measures announced within 3 months for the 40 countries in the report
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Original publication: thefederal.com · 28 October 2026
This page summarises the institution's view and does not reflect the view of Talay Insight. No direct quotation is used.