DGFT to consult IT hardware firms on new import system

The trade regulator has updated its online portal, which is already used for imports of semiconductor chips and steel, for placing import orders for laptops, tablets, PCs and servers, people aware of the developments said, requesting anonymity. The website was demonstrated to all IT hardware makers earlier this week, one of the people said.

“DGFT’s existing portal has been updated to include IT products, and companies must register on it to get the goods into the country. Some of the companies raised the issue that the government must ensure that there’s no disruption at the ground level when the goods start coming in," the person said, declining to be named.

Industry executives have highlighted the need for customs field units to be sensitized to the new system and for the government to issue a set of frequently asked questions that can help the industry ensure compliance locally as well as from the supply chain that may be outside India, a second person said, also seeking anonymity.

The import management system will be implemented during the peak of the festive season, which broadly spans the October to December period.

Industry insiders said retailers had started stocking products in advance in anticipation of festive demand and to avoid any potential hurdles after 1 November.

“If the imports of laptops get disrupted in any way from 1 November, retailers and brands would end up losing actual revenue from the potential sales during the festive season. Therefore, it is critical for the import management system to work flawlessly. Goods should not get stuck at ports for want of clarity from the Centre," a senior industry executive said, asking not to be named.

While the import management system will come into effect from 1 November, companies already importing laptops, servers and other IT hardware into the country will continue to do so without any restrictions on the quantities for the next 11 months. DGFT will begin imposing quotas on the quantities that can be imported from 1 November 2024, which is likely to be 5% less than that imported the previous year, and increase these restrictions by 25% each year over the next three to four years.

“The intention is to reduce our dependence on imports and nudge the companies to make in India. The import management system will monitor where the goods are coming from. Goods from countries that India is not comfortable with will not be allowed," a senior government official said earlier.

While companies such as Dell, HP and Lenovo already make large quantities of their laptops in India, others that sell lower numbers in the market import most or all of the products. Imports of laptops from China are amongst the highest in India.

The Global Trade Research Initiative (GTRI), a think tank, said global firms may feel uncomfortable about the import restrictions, as they will compel the companies to invest in India to maintain their current business level.

“Few have got their home countries to voice opposition. But, India, as one of the world’s leading economies, must navigate its policies independently. It’s worth noting that the US and EU (European Union) have taken more stringent actions to pursue their own self-interests," GTRI said in a note.

The case for local laptop manufacturing in India is compelling. China dominates the PC and laptop market with an impressive 81% share, amounting to a staggering $130 billion as of 2022.

“Such overdependence on one country poses a future supply risk as covid has demonstrated. In this context, India’s efforts to bolster local production of mobile phones, laptops, etc., are in the right direction. However, India must avoid incentivizing superficial shell assembly companies," the GTRI note further said.