Indian government imposes restrictions on laptop and PC imports to boost local manufacturing
05 Aug 2023
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By Aniket Gupta
In a move to promote domestic production in the electronics sector and especially curbing imports from China, the Indian government has imposed immediate restrictions on importing laptops, tablets, and personal computers falling under the HSN 8741 category.
The restrictions, as per a government notification, will allow the import of these items only against a valid license, signaling a major shift in the existing regulations that previously allowed companies to import laptops freely.
However, it is important to note that the new restrictions will not apply to imports under the baggage rules. This means that individuals travelling to India can still bring personal laptops and tablets without needing a license.
The decision is considered a direct support for the government's recent programme, known as the production-linked incentive (PLI) scheme, which aims to encourage the manufacturing of IT hardware in the country. The government's decision comes amid a steep increase in imports of electronic goods, laptops, and computers in recent years.
In the second quarter of this year (April-June), the import of electronic goods experienced a big hike, reaching $6.96 billion against $4.73 billion in the corresponding period of the previous year.
A significant portion, approximately half, of these restricted items, were shipped from China. And that is seen as further ground for the new restrictions, given that the relationship between India and China has experienced strains since border clashes in 2020.
Data indicates that India's imports of personal computers and laptops from China dropped 23.1 percent in the fiscal year 2022–23, amounting to $4.10 billion, compared to $5.34 billion in 2021–22.
There was a steep upswing in the imports of PCs and laptops from China. They were up 44.7% to $3.52 billion in 2020-21 and rose 51.5% to $5.34 billion in 2021-22. And that is what seems to have triggered the government’s reaction.
The reaction of Ali Akhtar Jafri, former director of the electronics industry body MAIT, was that the essence of the initiative is to encourage manufacturing to relocate to India. He said that it's not merely a gentle nudge, but a robust push.
While the measure is intended to encourage local production, industry executives have raised concerns about prolonged wait times for each new model's launch due to the licensing regime.
Major foreign players in the Indian market for laptops and computers, such as Dell, Acer, Samsung, Panasonic, Apple, Lenovo, and HP, have been taken aback by the sudden imposition of licensing requirements. Laptop makers were already anticipating government measures to reduce reliance on imports and promote local production, but the immediate implementation of licensing seems to have caught the industry off-guard.
Tech firms are now engaging with the Indian government to understand the licensing process and so as to expedite the acquisition of licenses, especially as India's festival shopping season and back-to-school period approach.
The need for licenses makes things more difficult for manufacturers, who are already facing an excess of products worldwide and struggling to increase sales. This may lead to delayed product launches in India or even shortages in a market that relies heavily on imports.
Will the government move boost local manufacturing and by reducing imports remains to be seen. Manufacturers and consumers alike are keeping their fingers crossed.
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