PC import curbs

TOPICS COVERED: Indian economy and issues relating to planning, mobilization, of resources, growth, development and employment.

Context: 

Recently, the government restricted the import of laptops, tablets, all-in-one personal computers, ultra-small form factor computers and servers.

Key details:

  • The import of these products would be allowed against a valid licence for restricted imports.
  • Import of all items categorised under the Harmonised System of Nomenclature (HSN) 8471, that is, automated data processing machines and units, would be restricted.
  • A valid licence would be required to import them for sale to consumers.
  • Exemption to licensing requirements would be extended in four circumstances.
  • First, purchasing a single unit of the mentioned products on an e-commerce website that are being brought into the country through post or courier.
  • It would only draw relevant duties.
  • This also applies to (reimport of) products meant for repair and return.
  • Permission has been given to import up to 20 such items in a consignment for purposes entailing research and development, testing, benchmarking and evaluation, repair and re-export or product development purposes.
  • Following their intended use, the products would either have to be destroyed beyond use or re-exported.
  • Items may be imported if they serve as an essential part of an entity’s capital good.

Need of the move:

The key objectives are:

  • to reduce the dependence on imports,
  • ensure the country has access to trusted hardware and systems and
  • increase domestic manufacturing of products.
  • On domestic manufacturing, the government had introduced the production-linked incentive (PLI) Scheme 2.0 for IT hardware.

Status of domestic production:

  • Domestic production of electronic goods increased to $87.1 billion in 2021-22 from $49 billion in 2016-17, registering a compound annual growth rate (CAGR) of 15%.
  • The country’s imports with respect to the products in discussion stood at approximately $10.1 billion in FY 2022-23, about 13% lower on a year-over-year basis.
  • The demand for laptops and tablets were being largely met through imports.

Way forward:

  • Concerns mostly revolve around accessibility to stocks and a potential impact on prices.
  • Global companies operating in India have sought that the implementation be deferred by 9-12 months to enable them time to ramp up domestic production and understand the licensing process.
  • For the longer term, vendors would be able to arrange for the required licences.
  • Customers will advance their purchases anticipating price increase going forward.

 

SOURCE: THE HINDU, THE ECONOMIC TIMES, PIB

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