Restrictions on Laptop Imports & Its Implications

What’s in today’s article?

• Why in News?
• What was the Decision Taken by the Union Government?
• Why did the DGFT Impose Ban on Import of Laptops & Similar Electronic Goods?
• After the Ban Comes into effect, how will Import of Laptops & Similar Electronic Goods Work?
• Implications of Import Ban on Laptops & Similar Electronic Goods
• Conclusion

 

Why in News?

• The Union Government’s decision to restrict import of laptops has now been suspended till 1^st November, 2023.

 

What was the Decision Taken by the Union Government?

• On 3^rd August, the Union Government imposed restrictions on import of laptops, tablets, all-in-one personal computers and ultra-small computers and servers with immediate effect.
• Any entity or company planning to bring laptops and computers for sale in India will now have to seek permission or license from the government for their inbound shipments.
• The notification in this regard was issued by the Directorate General of Foreign Trade (DGFT).
• The restrictions have been imposed under HSN Code 8471 on seven categories of electronic gadgets.
  • The Harmonized System of Nomenclature (HSN) code is a classification system used to identify products for taxation purposes.
  • HSN Code 8471 is used to identify devices that are designed to perform data processing tasks.
• This decision has now been suspended till 1^st November, 2023.
• The DGFT had to suspend the implementation as custom officials stationed at ports started holding up shipments of the specified electronic items.

 

Why did the DGFT Impose Ban on Import of Laptops & Similar Electronic Goods?

• The Directorate General of Foreign Trade (DGFT) is the agency of the Ministry of Commerce and Industry, responsible for administering laws regarding foreign trade.
• Although the DGFT notice did not specify any reason behind the change in policy, the move is largely being seen as a push for the Centre’s ‘Aatmanirbhar Bharat’ mission and a bid to reduce dependencies on China.
  • Aatmanirbhar Bharat Abhiyan is the mission started by the Government of India in May 2020, towards making India Self-reliant.
• China Factor –

 

Image Caption: Electronic goods imports by India

• Data released by the Ministry of Commerce and Industry gives us a broad picture of India’s dependence on China with regard to the import of electronic goods such as laptops, computers etc.
• Indeed, India’s imports of the aforementioned class of electronic goods have been steadily rising.
• Whereas in 2019-20, India’s imports of electronic goods stood at $5.3 billion, that figure climbed to $10.3 billion in 2021-22, before declining slightly to hit $8.7 billion in 2022-23.
• Given this fact, a rise in indigenous manufacturing would not only help India reduce its dependence on its diplomatic and business rival but would also help indigenous manufacturers expand their footprint globally.
• Security Factor –
  • Another factor behind the restrictions imposed on this class of electronic goods is concerns about ‘security’.
  • The restrictions may have been brought in to guard against electronic hardware coming in with “in-built security loopholes that may potentially endanger sensitive personal and enterprise data”.
• Across the world, many red flags have been raised about cybersecurity with regard to Chinese-manufactured electronics.

 

After the Ban Comes into effect, how will Import of Laptops & Similar Electronic Goods Work?

• An importer of such goods will have to apply for a license on the ban comes into effect.
  • The trader should have to be a regular importer to get a license.
  • Licenses can be taken for one year and companies can apply multiple times.
• Exemptions have also been given import of one laptop, tablet, all-in-one personal computer or ultra-small form factor computer, including those purchased from e-commerce portals through post or courier.
  • Also, there is an exemption from seeking import licensing for up to 20 items per consignment for R&D, testing, benchmarking and evaluation, repair and return, and product development purposes.

 

Implications of Import Ban on Laptops & Similar Electronic Goods

• Shortly after the announcement, shares of local electronics contract manufacturers have gone up
• Further, the government's announcement is expected to impact companies that import bulk of their products from outside India.
  • Big Corporations like Apple will have to either start manufacturing their laptops in India or stop importing their gadgets to India.
  • The same rule will also apply to other PC manufacturers like Lenovo, HP, Asus, Acer, Samsung.
• This will likely lead to an increase in the price of current laptops, computers, MacBooks, and Mac Minis in the Indian market.
• The restriction is likely to impact the sales and discounts that retailers and companies offer from time to time.
• If the demand will go up, the retailers will have no incentive to offer any discounts on the laptops.

 

Conclusion

• Government of India has identified electronics manufacturing as a key priority area for the country’s future growth ambitions and is hoping to attract investments from global electronic corporations.
  • Under Production-Linked Incentive 2.0 IT hardware scheme, 44 companies have already been registered and two companies have filed their application on the scheme portal by July 31, 2023.
• However, this import ban on laptops and similar electronic items could open the door for imposition of similar licensing requirements in other sectors, increasing the space for bureaucratic discretion.
• This decision might also lead to unnecessary disruption in the immediate term, create supply shortages and raise prices of electronic equipment.

 

---

Q1) What is the role of Directorate General of Foreign Trade?

This Directorate, with headquarters at New Delhi, is responsible for formulating and implementing the Foreign Trade Policy with the main objective of promoting India's exports. The DGFT also issues scrips/authorization to exporters and monitors their corresponding obligations through a network of 24 regional offices.

 

Q2)  What is anti-dumping import duty?

Anti-dumping duties are taxes imposed on imported goods in order to compensate for the difference between their export price and their normal value, if dumping causes injury to producers of competing products in the importing country.

 

---

Source: Government to delay implementation of laptop, PC import curbs | Deccan Herald