Why has India deferred its ban on imports of laptops? Who will benefit?

India is likely to defer its plan to curb the imports of laptops, according to several media reports. The development comes nearly two months after New Delhi announced that imports of laptops would be allowed against a valid licence. But what do we know about this decision? And why has it been taken? Let’s take a closer look: What do we know? Bloomberg quoted officials in the know as saying that tech importers will not need a compulsory licensing requirement. Instead, companies will be asked to register under the Centre’s ‘import management system’. People in the know, speaking on condition of anonymity, told the outlet the system would become functional on 1 November. Under the latest version of the government’s plan, companies importing laptops, desktops, tablets and servers will have to register with the ‘import management system.’

However, unlike the previous regime, companies will not have to tamp down on imports immediately.

Instead, the import quota would take effect gradually as companies start producing these goods locally. The companies’ quota would also depend on local production, IT hardware being imported and its exports. Smartphones are exempt under the new rules, as per Bloomberg. As per CNBC, curbs on imports of laptops, desktops and tablets will likely be introduced in late 2024 with the gradual ramp-up process set to conclude by 25 November, 2024. The move gives big companies that import laptops, tablets and desktops such as Apple, Dell and HP more breathing room. As per Gulf News website, India’s decision also came in for criticism from the United States. Why has this been done? The website quoted officials with direct knowledge of the scheme as saying that the electronics ministry proposed a simpler process. The matter was conveyed to industry representatives in a Friday meeting. Companies have been on tenterhooks following August’s order – following which they raised issues with the government. The Centre in August said it would defer the implementation of the import restriction order on laptops and computers including tablets till 31 October. The curbs were initially imposed to give a boost to local manufacturing keeping in mind the ‘Aatmanirbhar India’ concept. This, at a time when India has identified electronics manufacturing as a key priority area for its future growth ambitions and is hoping to attract investments from global biggies looking to diversify their operations outside China. Officials also cited security reasons as a factor and said the decision would curtail in-bound shipments of these goods from countries like China and Korea.

The import curbs will allow the Centre to keep a close watch on the locations from where the products are coming, officials added.

Under the PLI 2.0 (production-linked incentive scheme) IT hardware scheme, 44 companies have already been registered and two companies have filed their applications on the scheme portal till 31 July. India’s electronics imports, which include laptops, tablets and personal computers, stood at $19.7 billion in the April to June period, up 6.25 per cent year-on-year. Research firm Counterpoint estimates India’s laptop and personal computer market to be worth $8 billion annually, with two third of those imported. The intent seems to be “substitution of certain goods that are imported heavily”, said Emkay Global economist Madhavi Arora. But Sunil Raina, president and business head of Lava, praised the government’s move. Raina told CNBC, “Changes are required nevertheless. I think, from my perspective, we missed the previous bus on growing the manufacturing ecosystem in India. And that bus was actually taken by China. It could have been ours at that time. There would be some of these inconvenient decisions that will have to be taken and they’re only good for the future. Practically speaking, there’s never a good time to do something like this. But whenever you do it, it will lead to better results. I’m pretty sure, and I think it is a positive development and it should be encouraged and appreciated." With inputs from agencies