Note4Students

From UPSC perspective, the following things are important :

Prelims level: NA

Mains level: India's electronics and IT hardware production capabilities, challenges and measures

What’s the news?

The central government has placed restrictions on the import of laptops, tablets, and computers with immediate effect. As per the notification, the import would be allowed under a valid license for restricted imports.

Central Idea

India has imposed restrictions on the import of personal computers, laptops, and other IT hardware from China to promote domestic manufacturing and reduce dependence on Chinese imports. This move is part of the government’s efforts to boost the electronics sector and strengthen India’s self-reliance in the production of IT hardware.

Restricted Categories: The notification restricts the import of personal computers, laptops, palmtops, automatic data processing machines, microcomputers and processors, and large or mainframe computers falling under the HSN code 8471.
Import Against a Valid License: Imports of laptops, tablets, all-in-one personal computers, and ultra-small form factor computers and servers under HSN 8741 will be allowed only against a valid license for restricted imports.
Exemption for Research and Development: The government has granted exemption from import licenses for imports up to 20 items per consignment used for research and development, testing, benchmarking, evaluation, repair and re-export, and product development purposes. However, these imports can only be used for the stated purposes and not for sale.
Exemption for Repair and Return: The license for restricted imports is not required for the repair and return of goods that were repaired abroad, as per the Foreign Trade Policy.

Increase in Electronic Goods Imports:
India has witnessed a significant increase in imports of electronic goods and laptops/computers in recent years.
During the April-June quarter, the import of electronic goods surged to $6.96 billion, accounting for 4–7 percent of the overall imports.
Dominance in the Personal Computers Category:
Among the seven categories of restricted imports, China holds a substantial share in the personal computer segment, which includes laptops and palmtops.
In the April-May period, imports of personal computers from China amounted to $558.36 million, representing roughly 70–80 percent of India’s total imports in this category.
Surge in imports from China:
While there was a decline in imports from China in the previous financial year, it is crucial to address the sharp surge in imports in the two preceding years (2021–22 and 2020–21).
In 2021–22, imports of personal computers and laptops from China saw a year-on-year increase of 51.5 percent, amounting to $5.34 billion.
Similarly, in 2020–21, there was a significant year-on-year increase of 44.7 percent, with imports totaling $3.52 billion.

Boosting Domestic Production: India aims to strengthen its domestic production capabilities in the electronics sector. By restricting imports, the government wants to push companies to manufacture these goods locally in India.
Reducing Reliance on China: India has seen a significant increase in imports of electronic goods and laptops/computers from China in recent years. By imposing restrictions, India intends to reduce its reliance on Chinese imports and diversify its sources of electronic products.
Supporting the PLI Scheme: The move is seen as a direct boost to the Center’s production-linked incentive (PLI) scheme for IT hardware. The restrictions aim to encourage companies to participate in the scheme and invest in local production.
Addressing Trade Imbalance: India has faced a trade imbalance in the electronics sector with China. By limiting imports, India aims to address this imbalance and potentially improve its trade position.
Strengthening the Domestic Electronics Industry: The restriction is part of India’s broader strategy to develop and strengthen its electronics manufacturing sector. By promoting domestic production, India seeks to create job opportunities and enhance its industrial capabilities.

India’s decision to restrict IT hardware imports from China aims to reduce import reliance on a single country. With the right incentives and measures in place, this restriction could pave the way for a robust and competitive domestic IT hardware industry in India.