Curbs on PC, laptop imports: 3-month breather set to light up Diwali season

Original equipment manufacturers (OEMs) heaved a sigh of relief after the government decided to delay the licensing mandate for the import of personal computers by nearly three months. With this, import restrictions are not expected to dampen PC (including laptops, desktops, notebooks, and workstations) shipments ahead of the upcoming festival season.

The licensing mandate for imports of PCs is now effective from November 1. Still, the government’s move will increase the compliance burden on original equipment manufacturers, affecting certain companies more than others.

Following Thursday’s notification (which was to be implemented with immediate effect), companies such as HP, Apple, and Samsung were in fix over imports. Its deferral on Friday, however, gave them some breathing room.

According to a government notification, import consignments can be cleared until October 31 without a licence and a government permit would be required for the clearance of imports from November 1.

A government official ruled out the possibility of large-scale hoarding and escalated imports during the three-month transition period. “It is not easy to increase production at a rapid pace in electronic items. Also, since technology gets outdated very soon in this industry, hoarding may not be an option,” he said. 

The Directorate General of Foreign Trade (DGFT) has prepared an online portal where companies can apply for a licence, which will be issued within two days, provided that the applicant submits all the details required.  Meanwhile, the three-month extension is expected to give respite to OEMs ahead of the upcoming festival season. PC sales during the period are likely to remain upbeat. “Festival season normally accounts for 20 per cent of sales for consumer electronics and is a very crucial period for OEMs,” said Tarun Pathak, research director, Counterpoint Research. Import restrictions notwithstanding, PC shipments are expected to go up by at least 9-10 per cent, fuelled by festival purchases and a pick-up in enterprise demand, Counterpoint estimates suggest.

“OEMs need to localise their assembling plans. In the long term, it’s good for the ‘Make in India’ programme as the PC segment's local assembling contribution was only 35 per cent until now, as against 100 per cent in smartphones and TVs,” Pathak said. Domestic assembly of laptops and tablets in India generated sales of Rs 3,000 crore last financial year (FY23). 

Faisal Kawoosa, founder and chief analyst at Techarc, a market research firm, said the move would neither trigger hoarding by OEMs nor lead to a glut of products in the market. 

“OEMs, by now, would have planned for the festival season and earmarked the quantum of devices that they need to import. With the extension, they would now be able to import the quantities they require,” he said, adding, “I don’t see the prices of devices being affected either since these restrictions do not have any monetary burden.”

India’s PC shipments have been on a downward trend since the second half of last year. In the first quarter of this year, the PC market declined 30.1 per cent year-on-year to 2.99 million shipments, according to data from the International Data Corporation (IDC). HP led the pack with a 33.8 per cent market share, followed by Lenovo, Dell Technologies, Acer Group, and Asus.

“We expect that the notification will drive some pent-up demand as consumers will advance some of their purchases. Hence, we think, on an annual level, the decline could be 10-13 per cent,” Pathak said. 

The licensing mandate is in line with the Centre’s ‘Make in India’ push to boost domestic manufacturing and is expected to stimulate the recently introduced IT Hardware PLI 2.0 scheme, which has a budgetary outlay of Rs 17,000 crore.

As many as 44 companies have already been registered under the IT Hardware PLI 2.0 scheme. Two of them – including market leader HP – have filed applications for incentives under the scheme, according to sources at the IT Ministry.

The three-month reprieve aside, analysts said, the restrictions are likely to increase the compliance burden on OEMs like HP, Dell, and Lenovo, which, despite having manufacturing units in India, rely on component imports.

Companies looking for a licence are required to furnish details regarding the origin of consignments, the number of items, and their past import records. 

Currently, HP has manufacturing operations at contract electronics manufacturer Flex’s facility in Sriperumbudur near Chennai. Here, the company manufactures laptops, desktops, notebooks, and workstations for the Indian market.

“We have been manufacturing in India for quite a while now. Most of our portfolio is manufactured at our Chennai unit and we are looking to expand it,” Vikram Bedi, senior director (personal Systems), HP India, told Business Standard in a recent interview.

On the other hand, players like Asus that do not have a robust manufacturing presence in the country may face the heat. The Taipei-headquartered firm is said to be one of the companies to have registered under the IT Hardware PLI 2.0 scheme. Although the company has started manufacturing consumer notebooks in the country since July this year, it will be a while before Asus can move its entire supply chain to India.

“Currently, manufacturing in India is still in its initial stages, but we will see this ratio continue to increase over the next two-three years,” Arnold Su, vice-president, consumer and gaming PC, system business group, Asus India, said earlier.

Why the reprieve matters

• Festival season months normally account for 20% of the sales for consumer electronics, according to Counterpoint Research
• PC shipments are expected to go up by at least 9-10 % fuelled by festive purchases, Counterpoint estimates suggest
• Domestic assembly of laptops and tablets in India generated sales of Rs 3,000 cr in FY23