Reuters reported that India plans to impose import restrictions on laptops, tablets and personal computers as early as next year. This is part of a government-led initiative to encourage local production. It's meant to encourage companies such as Apple to expand their manufacturing in India.
If the restrictions are implemented, they could have a negative impact on India's IT Hardware market. The country's IT Hardware market is valued between $8 and $10 billion. India's laptop and other device market is heavily dependent on imports. Around two-thirds are met by foreign products, mostly from China.
India considered similar import restrictions in the past, but backed down last year due to opposition from businesses and lobbying from countries such as the United States. The government has monitored imports since then using a temporary system which is set to expire this year. In 2024, companies will have to apply for new import approvals.
The report quoted an official as saying, "The industry has adjusted well enough." This indicates that the government feels now is the time to implement the restrictions.
The official said that India will begin holding consultations next week with all stakeholders including leaders in the industry. The government wants to implement these restrictions as soon as possible, but it can delay them by a few weeks if needed.
The Ministry of Electronics and Information Technology in India (MeitY), is developing a new system of import authorisation that will require companies obtain approval prior to importing devices such as laptops and tablet computers. Under the current system companies are able to import devices after completing an online registration.
India's IT Hardware market is dominated primarily by HP, Dell Apple, Lenovo and Samsung. According to consulting firm Mordor Intelligence, India's laptop production is only Rs 5 billion out of a total market of Rs 20 billion.
The government has a plan to reduce import restrictions by introducing quality standards for notebooks, laptops and tablets. This is part India's "compulsory order" which aims at preventing low-quality goods from entering the market.
"We are considering these restrictions, because we cannot impose tariffs on laptops or tablets imported under global trade agreements." "Policy changes are the only way to limit imports," said a second government official.
India's electronic ministry has yet to provide an official response. The trade ministry stated that they will work closely together with the electronics ministry as well as other stakeholders, before making a decision.
BUILD LOCAL MANUFACTURING UP -
Import restrictions will benefit local contract producers like Dixon Technologies. Dixon Technologies has already signed agreements with global companies, such as HP, to manufacture laptops and computer in India. Dixon Technologies aims to meet 15 percent of India's total demand for laptops, computers and other IT equipment.
Some in the industry believe that import restrictions should align with India's production capacity. India's PLI scheme for IT hardware is already attracting global players such as Acer, Dell HP and Lenovo. Many of these companies are ready to increase local production.
PLI offers federal subsidies of nearly Rs 2,011 billion to promote domestic manufacturing. Companies like Lenovo and Acer increased local assembly of entry-level laptops in recent years. This led to a drop of 4% in the importation for fully assembled laptops during the first 5 months 2024 compared to last year.
India's drive to reduce its reliance on imported goods is also driven by concerns over cybersecurity and data privacy. In light of the growing risk of cyberattacks, the government has emphasized the importance for electronic devices and communications technology to be sourced from "trusted suppliers".
India will implement mandatory testing of key security features on electronic devices including CCTV cameras. The new requirement is set to come into force in April 2025 as part of India's strategy for ensuring the security of digital infrastructure.
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