India reportedly refuses to defer notebook import restriction by 9–12 months

India's surprising move to require licenses for imported computers and servers brings uncertainties to vendors selling devices in the country. The Indian government reportedly refused to grant the second postponement to implementing the import restriction.

The Directorate General of Foreign Trade of India announced Notifications 23 and 26 of 2023, saying that the import restriction shall be imposed on PC products under the HSN code 8471, with the effective date on November 1, to provide transition time for notebook and tablet vendors.

Indian media, including Mint, The Economic Times, and BusinessLine, reported that the Ministry of Electronics and IT held a closed-door meeting with IT hardware companies, including Apple, Lenovo, Cisco, Samsung, Asus, Acer, Dell, HPE, and HPE, to discuss the import restriction and address these companys' concerns.

The reports quoted sources saying that IT hardware companies requested a 9–12 month deferral of the plan, which the Indian government rejected. The Indian government expressed to participating representatives from the IT hardware industry that India expects IT manufacturing to go beyond packaging and assembly to the entire unassembled parts. Furthermore, the Indian government asked companies to submit phased plans for their production expansion in India.

The Indian government said the import restriction would be the License Raj in the 20th century, which required businesses to get approval before doing business in India. In addition to vendors, the Indian government reportedly discussed the matter with Indian OEMs and would talk with foreign OEMs in the coming days.

According to the reports, the Indian government wanted to know more about how vendors will expand production in India, on their own or through contract manufacturers.

The Indian government wanted to get more manufacturers on board the Production Linked Incentive (PLI) scheme for IT hardware, which failed to attract enough investments from global manufacturers in the first iteration. India launched the second iteration of the PLI scheme earlier this year and extended the application window from the end of July to the end of August in July. The Economic Times reported that 44 companies registered for the scheme.

According to Counterpoint Research, about 65% of the local demand for PCs, notebooks, and tablets is met with imports, with China accounting for about 70–80% of the imports. Meanwhile, India's electronics imports rose by 6.25% year-on-year in the April–June quarter. In fiscal 2023 (April 2022 to March 2023), India imported computers worth US$5.33 billion.

Source: BIS, August, 2023