Govt discusses 2 new criteria for import of information technology hardware

Move to link import value of companies' domestic manufacturing and exports

The ministry of electronics and information technology (Meity) on Friday discussed with stakeholders two new criteria in the new import licensing regime. It proposed a move to link the import of information technology (IT) hardware like laptops, tablets, personal computers, and small servers to a company’s domestic manufacturing value as well as to the value of its export of electronic products, such as IT hardware, mobile phones, wearables, hearables and telecom products.

In simple terms, companies will be given credit against their exports and domestic production, and the credit can be used for imports.

A few weeks ago, the government came out with an import licensing regime for the import of IT products. Under this, each company is to have a quota for the import of IT hardware which will be reduced progressively year-on-year, going down to 10 per cent in the fourth year over the first year.     The stakeholders say that the government has said that the new ‘import management system” will kick in from 1 November 2023. The date was pushed out by three months after strong protests from companies.

However, the government has assured that the new licensing regime will not disrupt the laptop supply chain as it will take time for the eligible companies under the product-linked incentive (PLI) scheme 2.0 for IT hardware to start assembling in India, and imports will therefore continue.

To obviate any shortage of personal computers in the country, companies might be asked to only register under the import management system. The mandatory licensing will be kept in abeyance till domestic manufacturing begins through the PLI scheme.

Some companies want the licence regime to be postponed till October 2024, by which time the government could have a fair idea about how successfully the PLI 2.0 scheme for IT hardware is going in terms of eligible companies making the required investment, their domestic production targets and activation of their export targets.

Explaining the reason for the meeting, a top MeitY official said: “There was a miscommunication earlier that we were imposing a mandatory import licensing regime. But what we plan to do is manage the import of these products. We had called a meeting to ask the stakeholders to give suggestions on how the proposed import management system should work and get their feedback .”

The meeting was attended by minister of state for electronics and IT, Rajiv Chandrasekhar, officials of his ministry, and representatives of leading laptop and server brands such as Apple Inc, HP, HPE, Dell, Acer, Asus, Samsung, amongst others.  If implemented, the move will be in sync with the second instalment of the government’s PLI scheme for IT products in which over 48 companies have participated. Most of the global brands have applied directly for the scheme or through their electronic management system (EMS) partners.

While the eligible players will be announced soon, they have been allowed to participate in the six-year PLI scheme from FY 24 or even FY 25, based on their choice of the first year. Currently, 80 per cent of the country’s laptops are imported, and most of them are from China.

The government’s move to impose licensing on imports was met with stiff opposition from top global PC companies. As many as 16 companies with businesses in the US, Japan, South Korea and Taiwan, countries with which India has friendly relations, would be affected by it.

Along with the US and Japan, India is part of the strategic Quadrilateral Security Dialogue.

The United States Trade Representative, Katherine Tai, who was in Delhi recently for G-20 meetings, also took up the matter with commerce minister Piyush Goyal. She raised serious concerns on the issue, and, in a statement after the discussions, pointed out that “stakeholders needed an opportunity to review and provide inputs to ensure that the policy, if implemented, does not have an adverse impact on US exports to India.”