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As the Union government explores ways to restrict import of laptops and other electronic devices starting with a 5 per cent reduction from the current level, it is working to ensure that there’s no supply disruption in India even if an import cap is introduced, it is learnt.
The caveat assumes significance in the context of the government’s announcement of its plan in August 2023 to issue licences for import of select IT hardware products to reduce the country's dependence on China.
However, due to resistance from companies, industry lobby groups and key trade partners including the United States (US), India stepped down from its earlier plan and a new import management system was introduced from November 2023 — to issue import permits in an end-to-end online format.
The import management system covers seven IT hardware items including laptop, tablet, all-in-one personal computer, ultra-small form factor computer and servers, and is currently in place till December 31.
Ahead of that deadline, steps are being planned all over again to boost India manufacturing while reducing imports.
A source in the government said that those manufacturing in the country and also those planning to start the process have expressed the need for an import limit so that they can take advantage of ‘Make in India’ under the production-linked incentive (PLI) scheme.
The Ministry of Electronics and Information Technology (Meity) has been engaged with the industry on this matter for long, while giving a series of extensions to the current system of automated import.
The government, while being aware of the possibility of getting caught in a trade restriction war in the global arena with such a curb, is clear that it wants to promote manufacturing in the country, another source said as he explained the need for placing import restrictions.
At least two new global majors are planning to begin manufacturing in India next April onwards.
According to one of the sources quoted above, the government is doing multiple things ahead of any restriction that may come in place.
It’s watching the progress of manufacturing in India and ensuring that supply disruption does not take place at any stage.
In the entire process, maintaining a level-playing field cannot be ignored while giving a push to the PLI scheme, the official said.
He added that national security considerations are in place too.
When asked about the quantum of reduction of import, the official said that no decision had been taken on slashing the import and by how much.
However, sources admitted that a discussion on cutting the import by 5 per cent towards the end of 2025 has taken place and could possibly be implemented without making it “official".
Expectations are that even when imports are cut, the supply of laptops and tablets would not reduce as manufacturing in India would pick up by then.
During the financial year 2023-24, imports of the seven IT hardware products stood at $8.7 billion, with the share of China at about 60 per cent.
In the case of personal computers, the share of Chinese imports hovered around 80 per cent.
With the existing import management system valid till December 31, the Directorate General of Foreign Trade under the department of commerce, is expected to issue SOPs for the do’s and don'ts on import of IT hardware products, for the benefit of the industry, any time now, according to a top official.
Meanwhile, even as India’s relations with China seem to have improved recently, the comeback of the Trump administration in the US can make things complex for India, industry watchers believe.
Even under the Joe Biden-led administration, India faced immense pressure from the United States (US) to keep America as well as relevant stakeholders informed about India's plan on the import monitoring system for select IT hardware products.
“The point we are reinforcing with the government of India is to keep us informed.
"The more we know what to expect…the more effective your measures are going to be, the better off we are all going to be including the impact to the US and Indian economy,” the US Trade Representative Katherine Tai had said earlier this year.
However, according to Delhi-based think tank Global Trade Research Initiative, the US stance on China is inconsistent.
“It imposes tariffs and restrictions on Chinese goods like solar cells and electric vehicles to protect its own interests but resists when other nations take similar steps that might affect American companies.
"India has a strong case for building its own laptop manufacturing capabilities. China controls 81 per cent of the global PC and laptop market, and any disruption there could have global repercussions,” GTRI said in a report.
