The government is likely to provide a one-month transition period while implementing the policy to restrict the import of laptops, tablets, and personal computers, announced on Thursday, government officials said on Friday.
In a move that took the largest manufacturers of computers, including Dell, HP, and Apple, by surprise, the government on Thursday announced that the imports of laptops, tablets, and personal computers would be restricted with immediate effect in a bid to curb Chinese imports and promote local manufacturing. The import of electronic products, including small tablets, laptops, and all-in-one PCs, will require a valid license.
Within a day, the government officials said there would be a transition period for this policy, without providing further details.
“There will be a transition period for this to be put into effect which will be notified soon,” Rajeev Chandrasekhar, Minister of State for Electronics and Information Technology, said in a Tweet.
In a separate tweet, Chandrasekhar said that regulating imports of these devices is not about “license raj” but about regulating imports to ensure trusted and verifiable systems reach the Indian technology ecosystem. “It is the government’s objective to ensure trusted hardware and systems, reduce import dependence and increase domestic manufacturing of this category of products.”
The Directorate General of Foreign Trade (DGFT) has prepared a portal, and companies can apply online for obtaining a license. The DGFT may issue a license within two days provided that the applicant submits all the required details. The Ministry of Electronics and Information Technology (MeitY) will support the industry for the clearance of shipments that are currently in transit, the officials said.
“We are looking at creating a safe and secure environment for our citizens and domestic manufacturers. Keeping that in mind, this notification has been brought out by DGFT under which the companies can import IT hardware, whether it is laptops, tablets, or everything that they are importing right now. But we will have some kind of a licensing mechanism,” a senior government official told reporters. He added that there will be an indication that the government is keen on allowing only trusted devices.
“The more and more local manufacturing happens, the more secure devices we will have. Under the IT hardware PLI 2.0 scheme, 44 companies have already registered, and 2 companies have filled their application for incentives under the scheme,” the official said, on the condition of anonymity.
Another government official on Friday said that through such curbs, India also wants to reduce the widening trade deficit with China.
“We want to address the trade imbalance with China and if capacities have come up in India, let production take place in the country rather than importing. We want more companies to invest and produce in India, meet domestic supply, and export,” the government official said.
In FY23, India imported $8.8 billion of the seven items brought under the licensing regime, out of which $5.1 billion (58 per cent) worth of products were sourced from China. India’s trade deficit with China ballooned to $83.2 billion, as compared to $73.3 billion in FY23. This is because outbound shipments from India contracted due to a slowdown in the Chinese economy, even as import dependency on the neighbouring country remained intact.
Amid apprehensions that import restrictions will increase the prices of laptops, the official clarified that it won’t happen since laptop PC makers have excess capacity in India.
OEMs in Panic, Halt Imports
Several original equipment manufacturers (OEMs), including the likes of Apple, Samsung, and HP, have reportedly halted new imports of laptops and tablets. Companies are also in talks with the Centre to obtain import licenses quickly.
“Everyone has had to halt imports since the regulations have been put in place with immediate effect. But that does not mean that the devices that were already processed and approved by regulatory authorities and are, perhaps, inbound will be stopped,” said a senior executive at a large laptop manufacturing company.
PC makers have also, meanwhile, approached the Directorate General of Foreign Trade (DGFT) to provide a three-month grace period before implementing the regulations, Business Standard reported earlier.
Analysts say that the restrictions are likely to throw a spanner in the works for market leaders like HP, Dell, and Lenovo, who, despite having manufacturing units in India, rely on component imports.
Imports account for around 90 per cent of all PC sales in the country, and the restrictions, companies say, could lead to a shortage in the market and a subsequent uptick in prices ahead of the upcoming festival season sales.
“It is going to create some demand versus supply mismatch, especially going into the festival season – which contributes to almost one-fifth of annual sales. Most device manufacturers tend to launch flagship devices during this period,” said Tarun Pathak, Research Director, Counterpoint Research.
“If not a price hike, the offers are going to dry up. Consumers will not get the same offers that they got last year,” he added.
India’s PC shipments have been declining since the second half of last year. In the first quarter of this year, the PC market, including desktops, notebooks, and workstations, declined 30.1 per cent year on year to just 2.99 million shipments, according to data from the International Data Corporation (IDC). Analysts say that the new restrictions are expected to put a further dampener on shipments.
India’s total imports of laptops and tablets in the financial year 2022-23 (FY23) were worth $5.89 billion, down from $7.95 billion in the previous year. Moreover, domestic assembly of these two items generated sales of Rs. 3,000 crore last year.
Meanwhile, the industry body Confederation of All India Traders (CAIT) has welcomed the restrictions, saying the move will boost domestic manufacturing and consumption of the restricted items.
CAIT National President B C Bhartia and Secretary General Praveen Khandelwal, in a joint statement, said that, so far, foreign goods were capturing the vast Indian market much to the disadvantage of consumers and local traders.
“With this step, the quality of Indian goods will be in demand and unnecessary flow of Indian currency to other countries will be stopped,” they said.
The move, they added, will stop refurbished items and substandard products from being Imported, and would discourage ‘fly by night’ Imports – which majorly evade GST. “Foreign Companies who consider India as a vast market will be compelled to make investments in India for setting up their manufacturing plants in India,” they said.