The Government has decided to put in place a mechanism to curb the imports of Laptops, Tablets, Personal Computers, and other products under HSN code 8471.
As per the recent notification of the Directorate of Foreign Trade (DGFT), companies importing Laptops, Tablets, Personal Computers, Main Frame computers, etc. must have a valid import license from 1st November onwards.
Why is the license requirement introduced?
The move to put in place license restrictions on the import of Laptops, Tablets, Microcomputers, etc. can be seen in the context of the government’s nudge for domestic manufacturing, especially when its amended PLI scheme for IT hardware is yet to pick pace.
Incidentally, most of the imports in IT hardware, especially personal computers, and laptops are from China with a massive share of more than 70% of the total imports of Laptops, and Personal Computers.
With the ongoing scepticism about IT hardware sourced from China, there are also cyber security reasons behind the move.
Its effect on Companies and Consumers.
With the domestic manufacturing capacities not yet in place, the move is going to push up the prices of Laptops and other IT hardware that are currently being imported. Companies like Samsung, Apple, Dell often import new models of laptops from their manufacturing hubs in China, and South Korea.
The move is intended to nudge companies to avail of the PLI scheme amended by the government to shift their manufacturing hubs to India.
Exemptions on the import of these products have been provided if they are imported as capital goods, or upto 20 items per consignment for research and development, testing, or re-export.
However, it may lead to heightened prices for consumers in the short term.
Considering the festive season ahead, it may lead to consolidation of demand at the moment wherein electronics like Laptops are often feature products of sales.
The move may also affect the tandem of technological developments wrt. India vis-a-vis the world.
Final Words: Its effect on the economy.
While the Directorate General of Foreign Trade (DGFT) aims to grant import licenses to companies quickly to not cause any inconvenience in the procedure, a lot depends upon its implementation.
It is also questionable whether the move would lead to the desired results. As was seen during the pre-liberalised economic era, licenses often led to corruption and maintained the monopoly of a few large conglomerates, thus hampering competition.
At the same time, free-market economists like Arvind Panagariya (first Vice-Chairman of NITI Aayog) have often critisised trade licenses and argue that it leads to anti-competitive practices, while not affecting the prices of products (which is one motive for the license system).
