On August 3, the government announced restrictions on the import of various IT hardware products.
These products include laptops, tablets, all-in-one personal computers, ultra-small form factor computers, and servers.
Initially, the restrictions were meant to be enforced immediately.
However, a revised order postponed the enforcement until November 1.
Import of items under Harmonised System of Nomenclature (HSN) 8471, which covers automated data processing machines and units, will be restricted from November 1.
A valid licence will be required for importing these products for sale.
Exemptions from licensing include:
Purchasing a single unit of mentioned products from e-commerce websites via post or courier.
Import of products for repair and return.
Importing up to 20 items in a consignment for research, development, testing, benchmarking, evaluation, repair, re-export, or product development.
Importing items that serve as essential parts of an entity's capital goods.
Objective:
The primary objective is to reduce import dependence and enhance domestic manufacturing of IT hardware.
The government had introduced the production-linked incentive (PLI) Scheme 2.0 for IT hardware in May to promote domestic production.
Domestic Production and Imports:
Domestic electronic goods production grew to $87.1 billion in 2021-22 from $49 billion in 2016-17, with a 15% CAGR.
Imports related to the discussed products were around $10.1 billion in FY 2022-23, about 13% lower YoY.
Challenges and Impact:
IT hardware manufacturing capacity in India had declined over the years, leading to increased imports.
Companies like HP, Lenovo, Dell, Acer, and Asus dominated the domestic PC market.
Concerns arise regarding accessibility to stocks and potential price impacts.
Global companies request a 9-12 month deferment to increase domestic production and understand licensing.
Expected Developments:
Vendors are expected to stock inventory till October-end to avoid disruptions during festive sales.
Most major vendors have local assembly setups except Apple and Asus (potentially in the future).
Prices are not expected to increase for the next three months due to the festive season, but anticipation of future price hikes might drive early purchases.
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