In a significant development, laptop/personal computer (PC) and server makers have written to the government asking it to defer its decision to impose licensing restrictions on imports of electronics, including laptops, tablets, and personal computers beyond October 31 and also reassess it.
“The industry submits that the government should make an objective assessment on how the Production Linked Incentive (PLI) 2.0 scheme starts to positively impact domestic production. Realistically, nine months after the PLI for IT hardware has been launched, the government may undertake a re-assessment of the investment pipeline and the supply situation before inviting the industry to discuss whether any further policy intervention is needed at that stage,” India Cellular and Electronics Association (ICEA) said in a letter to Alkesh Kumar Sharma, Secretary, Ministry of Electronics and IT (MeitY).
ICEA represents companies such as HP, Dell, HP Enterprises, Apple, Acer, Asus, and Lenovo.
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Earlier this month, the government had announced import restrictions on identified electronic items, such as tablets, personal computers, and laptops, citing security concerns and the need to promote domestic manufacturing of IT hardware. Under the new rules, importers are mandated to obtain a license from the Directorate General of Foreign Trade (DGFT) to import these products. Following protests from the industry, the DGFT deferred implementation of its order till October 31 2023.
In its letter dated August 22, the ICEA has urged the government to wait for at least nine months after the PLI 2.0 scheme is implemented, as it may be too early to assess the full implication of the new scheme before then.
“Where servers are concerned, we have received inputs that companies in that sector seek a relook at their inclusion in the proposed intervention. Overall, we will request the government to layer any intervention in a manner that works well for the industry as a whole, since individual companies are differently placed, at varying degrees of investments and products at this stage,” the letter noted
The ICEA further mentioned that over 90 per cent of global demand is serviced by these seven companies (Dell, HP, HPE, Apple, Acer, Asus, and Lenovo) and demand for manufacturing is both created and supplied by them. .
“While we are committed to gradually creating and nurturing Indian Champion companies, the seven companies drive the global industry. The views of these seven companies have also been considered in our discussions held earlier,” it said.
According to sources in the industry, the situation is volatile right now as on one hand, the government has encouraged everyone to apply for the PLI scheme, while on the other it is planning to restrict imports soon.
“The PLI will effectively kick off from next year. But if imports are restricted much before that, how will we serve the demand of the consumers? Every sector, especially big software companies, will be impacted if import restrictions are imposed because they are bulk buyers,” a laptop manufacturer told businessline.
US Trade Representative Katherine Tai, in her recent bilateral meeting with Commerce & Industry Minister Piyush Goyal, raised concerns related to India’s import licensing requirements for technological equipment. “She noted that there were stakeholders that needed an opportunity to review and provide input to ensure that the policy, if implemented, does not have an adverse impact on US exports to India. Ambassador Tai and Minister Goyal agreed to explore this issue further and find a solution that addresses both countries’ concerns,” per a statement issued by the USTR office.
