India modifies plan to restrict laptop imports, opts for new protocol

The Indian government has rolled out an ‘import management system’ for electronic goods, including personal computers and laptops, modifying an earlier decision to restrict their imports.

The decision comes after The Economic Times reported this week that the US, China, Taiwan and South Korea had raised concerns at a recent World Trade Organization meeting over New Delhi’s decision to restrict imports.

Bloomberg had reported on 26 September that India was likely to defer compulsory licensing requirements for laptops and PCs and, instead, introduce an import management system, in what would come as a breather for global consumer electronics makers such as HP, Dell, Acer, and Lenovo.

The new import management system is likely to come into force from 1 November, with the decision being reportedly made to avoid affecting laptop and PC sales during the festival season.

Under the new system, IT hardware firms will need to register and disclose data on imports, including the number of laptops and computers that they are bringing into the country and the countries from where the goods are being imported.

New Delhi is looking to step up domestic production of consumer electronics, while trying to ensure sufficient supplies. An import quota is likely to come into effect after Indian companies boost the production of these gadgets locally.

The apex industrial body, the Indian Cellular and Electronics Association (ICEA) welcomed the government’s decision.

“The decision addresses immediate industry concerns and lays a solid foundation for a structured dialogue towards fostering a robust domestic IT hardware manufacturing ecosystem,” said Pankaj Mohindroo, chairman of ICEA.

Mohindroo said ICEA is working with Directorate General of Foreign Trade (DGFT) to ensure a smooth transition to the import management system from 1 November.

To boost local industry, India has set an target of manufacturing and exporting $300 billion worth of electronics goods by 2026.

As a part of the push, the government rolled out a production-linked incentive scheme for IT hardware. This plan offers financial rewards to companies that produce computer hardware in India. So far, 44 companies are in line to be a part of this scheme, and two more are expected to join soon.

But changes take time, which is why the government is letting companies import computer parts without any special approval for now, as long as they pay the usual taxes, analysts said.

The latest DGFT notification, dated 19 October, said IT hardware can now be imported without the need for prior authorization, subject to payment of relevant duties.

The document amends an earlier restriction put in place in August of this year.

The notification specified that IT hardware made in special economic zones (SEZs) can be brought into domestic trading areas without import authorization. However, the notice makes it clear that re-packing, labeling, refurbishing, testing, and calibration carried out at SEZs will not qualify as manufacturing for the purpose of this exemption.

The regulation requires private firms to produce valid end-user certificates from appropriate government authorities when importing IT hardware for supply to central government agencies or enterprises under central government control for defense or security purposes.

The exemption from import authorization extends to up to 20 items per shipment for purposes such as research, testing, benchmarking evaluation, and product development. DGFT has also expanded this exemption to include items sent for repair, return, or replacement, as well as those previously sold or repaired abroad.

Imports of electronics, including laptops, tablets, and personal computers, in the April-to-June quarter stood at $19.7 billion, up 6.25% from a year ago.