With the recent import restriction on laptops and tablets in the Indian market amidst the upcoming festive season, global tech companies are facing a shock wave. On August 3, a notification by India’s directorate general of foreign trade (DGFT) put an immediate (now amended to 1st November 2023) restriction on importing seven different kinds of products, including Laptops, PCs, microcomputers, and others. According to the issued notification, to import these kinds of products in India, a valid import license will be required, which wasn’t the case earlier.
India has the cheapest internet rates and a vast market for these devices. According to Statista, the current revenue in the Indian market for laptops alone is $6 billion, which is expected to grow at a rate of roughly 7% in the CAGR of 2023–2028.
In this article, we will discuss the possible reasons behind the trade restriction on items that fall under HSN 8471 and how this will impact India and its market.
The Import Restriction
The Directorate General of Foreign Trade (DGFT) has issued a notification (notification no. 23/2023) with the subject “Amendment in Import Policy of Items Under HSN 8471 of Chapter 84 of Schedule-I (Import Policy) of ITC (HS), 2022-reg” to put a restriction on the import of laptops, Tablets, All-in-one PCs, and ultra-small form factor Computers and Servers falling under the HSN (Harmonized System of Nomenclature) 8471. In addition to this, the notification also stated that the import of these items will be allowed only with a valid license.
It will take effect on November 1, 2023.
Revised Policy For Restricted Items
The import policy of the following items has been revised under the notification 23/2023.
|ITC (HS)||Item Description||Existing Policy||Revised Policy||Revised Policy Condition|
|84713010||Personal computer||Free||Restricted||Subject to Policy Condition No. 4 of Chapter|
|84713090||Other||Free||Restricted||Subject to Policy Condition No. 4 of the Chapter|
|84714110||Microcomputer||Free||Restricted||Subject to Policy Condition No. 4 of the Chapter|
|84714120||Large or mainframe computer||Free||Restricted||Subject to Policy Condition No. 4 of the Chapter|
|84714190||Other||Free||Restricted||Subject to Policy Condition No. 4 of the Chapter|
|84714900||Other automatic data processing machines; Other, presented in the form of systems||Free||Restricted||Subject to Policy Condition No. 4 of the Chapter|
|84715000||Processing units other than those of subheadings 8471.41 or 8471.49, whether or not containing in the same housing one or two of the following units: storage units, input units, and output units||Free||Restricted||Subject to Policy Condition No. 4 of the Chapter|
Exemptions From Restrictions
The intention behind the restriction is focused on trade markets only; hence, imports for other purposes are exempt from this restriction.
The exemptions are as follows:
- The restriction shall not apply to Imports under the Baggage Rules, as amended from time to time.
- Exemption from Import Licensing requirements is provided for the Import of 1 Laptop, Tablet, All-in-one Personal Computer, or ultra-small form factor Computer, including those purchased from e-commerce portals, through post or courier. Imports shall be subject to the payment of duty as applicable.
- Exemption from import licensing is provided for up to 20 such items per consignment for R&D, Testing, benchmarking, evaluation, repair and re-export, and Product Development purposes. Given, imports shall be allowed subject to the condition that the imported goods shall be used for the stated purposes only and will not be sold. Further, after the intended purpose, the products would either be destroyed beyond use or re-exported.
- A license for restricted imports shall not be required for the repair and return of said items.
- Laptops, Tablets, All-in-one Personal Computers, and ultra-small form factor Computers and Servers that are essential parts of a Capital Good shall be exempt from the import licensing requirements.
What Are The Possible Reasons Behind The Trade Restriction?
There are various speculations about the probable reason behind the restriction; the primary reason is the dependence on China for electrical equipment, especially portable devices like smartphones and computers.
In recent years, India has wanted to decrease its import dependency, especially from countries like China. According to the latest reports by the OEC (The Observatory of Economic Complexity), In May 2023, the top imports from China to India were Semiconductor Devices ($719M), Computers ($585M), Telephones ($546M), Integrated Circuits ($390M), and Flat panel display modules ($264M).
However, unlike China, which is the home of multiple big electronic companies, Indian companies are fewer in number. India cannot force itself to start an electronic company, but it can push other companies to establish a manufacturing and assembly firm in India if they want to exploit the big Indian market.
India is also offering good incentives to attract global giants in such a category. According to the Ministry of Electronics and Information Technology, India’s production-linked incentive scheme 2.0 for IT Hardware extends an average incentive of around 5% on net incremental sales (over base years) of goods manufactured in India and covered under the target segment to eligible companies for six years. The target segment under PLI shall include laptops, tablets, All-in-one PCs, servers, and ultra-small form factors (USFF).
India is emphasising ‘Make in India’ and Digital India’, hoping these tactics will prove fruitful in decreasing its dependency on China and other countries.
Impact of Import Restrictions
Simple Demand and Supply will be observed in the market; with a decrease in the supply of these items, the prices will shoot up, causing inconvenience for Indian customers. Where companies like HP and Acer, which mostly import their products from China, will face problems, companies like Dell India Pvt. Ltd., which has been manufacturing in India for more than a decade, will exploit the market opportunity.
An increase in manufacturing and assembly units in India is also possible in the coming future.
India imposed restrictions on imports of items under HSN 8471, which particularly deals with computers and tablets; the restrictions shall take effect from November 1, 2023. The restrictions are said to be imposed to foster domestic manufacturing and reduce dependence on countries like China and Korea.