Although it is common practice for the government to introduce new policies hurriedly, especially when it comes to the recent licensing requirement for all-in-one personal computers (PCs), laptops, tablets, and servers, it was pushed three months back to 1 November due to how new policies were hurriedly introduced in the country.
It is a compelling proposition for the Indian government to pursue the goal of becoming an Atmanirbhar Bharat or an independent nation in the information technological (IT) hardware space, which is logical and appealing to the Indian people for numerous reasons.
As a result of the government's decision to curb imports of laptops, tablets, and PCs, along with the government's PLI to purchase IT hardware worth Rs 17,000 crores, local factories will now be able to produce devices priced at more than a billion dollars, which will considerably reduce import dependency over the next 2-3 years.
The government has enacted an amended law, which makes it mandatory for importers of laptops, tablets, and certain kinds of computers to obtain a valid license. This is within seven days of import. As a matter of security, as well as to encourage goods manufacturing in the country.
The government decided on Friday to give businesses a "transition period" to adjust to the changes to the licensing regime mandated for laptops, tablets, and personal computers a day after mandating one. There are fears that tighter supply and higher prices could result from the urbs.
As the government has stated, the purpose behind introducing this policy is to protect the security interests of the country and its citizens
Rajeev Chandrasekhar, Minister of State for Information Technology & Electronics, said that a notification would be released regarding the relaxation of norms as soon as possible.
According to sources, India can manufacture enough IT hardware devices to not restrict the availability of laptops, tablets, all-in-one computers, ultra-small computers, and servers domestically, as the requirement to obtain permission to import these items is likely to not hurt domestic availability.
A government source told The Indian Express is committed to the establishment of an internet in India that is open, safe, trustworthy, and accountable for all its users so that everyone can access it. There is also a likelihood that citizens will be exposed to user harm and criminality as a result of increasing penetration of the Internet and a subsequent increase in the number of Indians going online.
Furthermore, the reports state that IT hardware has security loopholes that may expose sensitive personal data to cyber criminals and endanger enterprises and governments. It has been noted that the foundation for securing the network is the provision of secure hardware.
Under the old production-linked incentive scheme, OEL has been approved to manufacture IT hardware, and it is expected that it will apply PLI 2.0, which expires on August 30.
There is a total of 44 companies who have registered for the PLI scheme 2.0 in India, while two global companies have sent in their applications to make IT hardware devices in the country.
A US-based technology company called HPE signed an agreement last month with VVDN Technologies. Under the agreement, the two companies plan to produce high-end servers worth USD 1 billion over the next 4-5 years under a 10-year agreement.
Tarun Pathak, Research Director at Counterpoint Research, stated there is a close to $8 billion market size for laptops and PCs in India every year.
He said that the majority of units are imported, with about 65 percent being imported from overseas.
As a co-founder, Chairman, and Managing Director of Lava International, Mr. Hari Om Rai emphasizes that the government has done a great job restricting imports if they have a valid permit to do so. According to him, all supply chain disruptions have been averted as a result of the government's actions.
As a result, companies will not have to worry about "ease of doing business" issues, which will ensure they can offer the same products at the same price to their customers in the future.
As per current Canalys data, in the third quarter of 2023, there was a 35 percent decline in the Indian PC market (desktops, notebooks, and tablets), with 3.9 million units shipped during the quarter.
As a result of a muted 2023, Canalys expects that the Indian PC market will rebound strongly in 2024 with 11 percent growth and 13 percent growth in 2025, following a muted 2023. Canalys predicts that device sales will exceed 1 billion units in 2025.
As per Vinod Sharma, Chairman of the CII National Committee for Electronics and MD of Deki Electronics, incentives are provided for locally manufactured components under the IT Hardware PLI.
A boost will be given to the domestic component ecosystem as a result of this decision.
In the past, companies were allowed to import laptops without any restrictions before the Directorate General of Foreign Trade issued its notification on August 3.
While the notification does not exclude certain categories of items, including laptops, tablets, laptops with all-in-one computers, and ultra-small form factor computers that are included in the luggage allowance as part of the baggage allowance, certain items are excluded.
There is also an exemption for up to 20 IT devices per consignment.
These devices are used for research and development, testing, benchmarking, evaluation, repair, and product development purposes. The re-importing of repaired goods, and devices which are essential parts of a capital good, is also exempt because they are repaired abroad.
To create a scale economy for IT hardware devices in India, the government notified in May this year the implementation of the production-linked incentive scheme 2.0, which will ultimately result in further lowering the price of IT hardware devices since India has sufficient capacity to manufacture IT hardware devices.
The government has notified the scheme to boost domestic manufacturing and create an economy of scale.
There were already 44 companies registered with the PLI 2.0 IT Hardware Scheme as of July 31st. Until the end of August 2023, companies will be able to submit their applications. In the long run, IT Hardware OEMs and EMS players may have to recalculate their production plans in four years, since the Non-Trade Barrier will threaten to eliminate imports by 93 percent within four years, which could cause them to recalculate their production targets.
Based on the information, all big IT hardware companies, except Apple, have participated directly or through their EMS companies in the PLI 2.0 for IT Hardware scheme. These companies include Dell, HP, HPE, Lenovo, ASUS, ACER, Intel, and other local brands. As part of the "Make in India" initiative, the government is encouraging the local manufacture of goods and discouraging imports.
From April to June of this year, India imported $19.7 billion worth of electronics, including laptops, tablets, and personal computers. This is up 6.25% from a year ago. Imports of personal computers, including laptops, were $5.33 billion in 2022-23, creating an increase from $5.10 billion a year previously.
A laptop, a PC, and other similar items are not generally subject to customs charges when they enter India, in general. As a result of signing a 1997 Information Technology Agreement (ITA), India has committed that from that date onwards there will be no duty on computers and many other IT-related products.
