India restricts laptop and server import to boost local manufacturing

India restricts laptop and server import to boost local manufacturing

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India restricted import of laptops, servers and many other consumer-electronic devices on Thursday, saying it will impose a licensing permit for imports in a move analysts say appears to be aimed at boosting the local manufacturing efforts.

“Import of laptops, tablets, all-in-one personal computers, and ultra small form factor computers and servers falling under HSN 8741 shall be ‘restricted,’” a government notification said, adding that the import will be allowed against a valid license for restricted imports. The restriction will also not apply to passengers carrying the mentioned devices in their baggage.

The move, which follows a similar curb on smart TV imports years ago, is likely to help boost local manufacturing, but New Delhi did not offer an explanation. India’s ban on smart TV imports nearly three years ago boosted local manufacturing, according to analysts.

The revised policy. Image Credits: Ministry of Commerce and Industry, Government of India

India has been providing incentives to firms in recent years in a bid to spur domestic production. The initiative has successfully drawn in a swath of smartphone manufacturers and is now increasingly piquing the interest of chipmakers and semiconductor producers.

In May, the Narendra Modi government unveiled a $2 billion scheme aimed at promoting businesses locally building hardware like laptops, PCs, servers and related edge computing kits. The scheme was an upgrade to the previous program under which the government was willing to spend $892 million.

“This policy announcement seems to be based on the premise of providing secure digital access to the burgeoning number of digital citizens in the country.  We are confident that valid licenses will be provided to trusted industry partners which will enable Ease of Doing Business (EoDB) and unrestricted access to trusted brands for digital consumers,” said Pankaj Mohindroo, chairman of Indian Cellular and Electronics Association, in a statement.

Dell and HP are among the companies that already have manufacturing facilities in India. The Indian government also aims to expand local production further and make the country a desirable location for Apple and its manufacturing partners to establish a global manufacturing hub. However, the country currently spends billions of dollars on importing laptops and other hardware.

According to the government data shared in the parliament in December, the import value of finished electronic goods in India grew 32% to $43 billion in 2021–2022 from over $32 billion in 2019–2020. However, the incentives and schemes offered to boost local production helped drop the share of imported finished electronic goods (including components) in total imports of electronic goods to 64% in 2021–22, down from 69% in 2019–2020.

Hong Kong–based market research firm Counterpoint estimates that around 30% to 35% of laptops and 30% of tablets shipped to India during the first half of 2023 were manufactured locally.

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