In order to augment the growth of indigenously manufactured palmtops, laptops, PCs, the government of India has announced an import restriction on the foreign products.
As per the notification issued by the government on 3 August , the Directorate General of Foreign Trade stated that imports of computers and other seven category items of HSN 8471 have been restricted to be imported. However, the restriction will not be applicable to imports under baggage rules.
The imports will only be allowed against a valid license for restricted imports. Along with that, import licensing exemption is also provided to the imports of one laptop, All-in-one PC, ‘ultra small form factor computer’ or tablet through post or couriers. This also includes the products ordered through e-commerce. However, such imports will attract import duties as applicable.
Apart from the above, any import that counts to capital goods will also be exempted. For the purpose of R&D, repair, testing, evaluation among others, the import restrictions have been eased to 20 items per consignment, subject to refraining from re-sale.
Two Way Implications of Import Restriction
The move has two way implications. First, the local manufacturing will get a boost and second, to relinquish the dependency on Chinese manufactured products that have a major share in Indian markets.
As it is well-known that India is currently pushing the indigenous production of electronic hardware in the country for which PLI scheme has been boasted as the most crucial support scheme. If reports are to be believed, India has seen a surge in the shipment of laptops, PCs and other equipment in past few years before registering a decline since past few quarters.
Potential In Indian Markets
As per Canalys, in Q1 of 2023, Indian PC market shipment suffered an y-o-y decline of 35% to 3.9 million units. But interestingly, the figure is still 47% more than pre-pandemic era, i.e., Q1 of FY19. Therefore, the decline is the result of returning to normalcy after the pandemic era, during which the demand saw an offshoot. All in all, the demand is still high which has created an opportunity for local production.
This is evident by the import figures which show that in FY23, China accounted for 75% of Indian imports of laptops and PCs, which accounted for $5.33 billion. Nonetheless, the restriction also has some repercussions, and the first one is the restricted supply, as the govt. notification puts an import restriction with immediate effect. Lastly, for quite some time, the products will come with a higher cost.