The Directorate General of Foreign Trade (DGFT) in India has recently released a statement announcing an imposition on the import of laptops, computers, and their components. This restriction, applicable from November 1, 2023, focuses on items under the Harmonised System of Nomenclature (HSN) Code 8471 that includes data processing machines. Notably, these curbs will not apply to imports under baggage rules.
Reasons for Import Restrictions
The Indian government aims to boost domestic manufacturing through these foreign import curbs, especially those from China, boosting the self-reliance of the nation’s technology sector. It aligns with governmental efforts to bolster domestic production via the rebooted production-linked incentive (PLI) scheme for IT hardware. Additionally, these restrictions aim to block the inflow of electronic hardware with possible security vulnerabilities that might compromise sensitive personal and enterprise data. By controlling imports, the government hopes to create a propitious environment for local manufacturers to broaden their global outreach.
Impact of Restrictions on the Market and Consumers
Imposing import restrictions on laptops and related devices could potentially cause disruptions in the supply chain, thereby impacting the availability of certain laptop models in the market. This policy may momentarily cause a supply crunch, as importers await license approvals. Consequently, this development could lead to higher prices and decreased availability of laptops, tablets, personal computers, and servers. However, it offers an opportunity to domestic manufacturers, who might experience a surge in demand if foreign imports diminish. Longer-term, these limitations might stimulate the advancement of domestic laptop manufacturing capabilities, leading to more sophisticated and competitive products.
Current major players in the laptop market like Dell, HP, Lenovo, Acer, Asus, and Apple, who largely import their products from countries such as China, Vietnam, Taiwan, will be substantially affected. They would either have to shift their production base to India or source from local manufacturers complying with the quality standards. This policy also opens doors for new entrants and local manufacturers, who could utilize the PLI scheme to offer competitive products at reasonable rates.
The Harmonised System of Nomenclature (HSN)
HSN is an international product coding system that accords a unique code to each internationally traded product. Customs authorities worldwide use this code to identify and gauge tariffs on imported goods. Traders and exporters also utilize it to declare their goods and adhere to origin rules. The World Customs Organization developed HSN in 1988 and updates it every five years.
About Directorate General of Foreign Trade (DGFT)
Established as a successor to the Chief Controller of Imports & Exports (CCI&E) in 1991, DGFT is a governmental body under the Ministry of Commerce and Industry that implements the country’s foreign trade policy. Headquartered in New Delhi and with regional offices across the country, DGFT promotes and regulates foreign trade through various schemes and measures, including issuing licenses, authorizations, certificates, incentives, etc. It also provides guidance and assistance to exporters and importers, and coordinates with other ministries, departments, agencies, and stakeholders on trade-related issues.