The central government has set urgent limitations on the import of laptops, tablets, and PCs. According to the notification, the item would be permitted with a valid licence for restricted imports.
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The Big Idea
- To boost indigenous production and minimise reliance on Chinese imports, India has imposed limits on the import of personal computers, laptops, and other IT devices from China. This measure is part of the government’s aim to grow the electronics sector and increase India’s self-sufficiency in IT hardware production.
What is stated in the import restriction notification?
- Restricted Categories: According to the notification, the import of personal computers, laptops, palmtops, automatic data processing machines, microcomputers and processors, and big or mainframe computers with the HSN code 8471 is prohibited.
- Import with a Valid Licence: Imports of laptops, tablets, all-in-one personal computers, ultra-small form factor computers, and servers under HSN 8741 will be permitted only with a valid licence.
- Exemption for Research and Development: The government has given exemption from import licences for imports of up to 20 goods per consignment for the purposes of research and development, testing, benchmarking, evaluation, repair and re-export, and product development. These imports, however, can only be used for the listed objectives and cannot be sold.
- Exemption for Repair and Return: According to the Foreign Trade Policy, the licence for limited imports is not required for the repair and return of products repaired abroad.
China’s Import Dominance in IT Hardware
Imports of Electronic Goods Have Increased:
- In recent years, India has seen a major growth in imports of electronic goods and laptops/computers.
- The import of electronic items increased to $6.96 billion during the April-June quarter, accounting for 4-7 percent of total imports.
Dominance in the Personal Computers Category:
- Among the seven banned import categories, China dominates the personal computer market, which includes laptops and palmtops.
- Personal computer imports from China totaled $558.36 million in April-May, accounting for around 70-80 percent of India’s overall imports in this category.
Surge in Chinese imports:
- While imports from China fell in the previous fiscal year, it is critical to address the substantial increase in imports in the two preceding years (2021-22 and 2020-21).
- Imports of personal computers and laptop computers from China increased by 51.5 percent year on year in 2021-22, totaling $5.34 billion.
- Similarly, imports totaled $3.52 billion in 2020-21, representing a strong year-on-year growth of 44.7 percent.
The reasons behind the limits
- Increasing Domestic Production: India intends to improve its domestic manufacturing capabilities in the electronics sector. By limiting imports, the government hopes to encourage enterprises to manufacture these goods in India.
- Reducing Dependence on China: In recent years, India has experienced a major growth in its imports of Chinese electronic items and laptops/computers. India plans to lessen its reliance on Chinese imports and diversify its sources of electronic items by imposing limitations.
- Supporting the PLI plan: The decision is considered as a direct boost to the Center’s PLI plan for IT hardware. The limits are intended to encourage businesses to join in the scheme and invest in local manufacturing.
- Addressing Trade Imbalances: India has a trade deficit with China in the electronics sector. India hopes to remedy this imbalance and potentially improve its trading position by reducing imports.
- Domestic Electronics Industry Strengthening: The limitation is part of India’s larger goal to grow and strengthen its electronics manufacturing sector. India hopes to create jobs and improve its industrial capabilities by supporting indigenous production.
Conclusion
India’s plan to limit IT gear imports from China attempts to lessen reliance on a single country for imports. This restriction, with the correct incentives and measures in place, might pave the path for a large and competitive local IT hardware business in India.
Source: https://economictimes.indiatimes.com/news/how-to/why-govt-banned-imports-of-laptops-computers-how-will-it-help-india-here-are-all-the-answers/articleshow/102417277.cms#:~:text=India%20has%20announced%20limitations%20on,commodities%20from%20China%20and%20Korea.