The Centre on Thursday imposed import restrictions on laptops, tablets, and certain classes of computers, marking a change in the government's policy of unrestricted trade with regard to these goods.
In a notification, the Directorate General of Foreign Trade (DGFT) announced that the "import of laptops, tablets, all-in-one personal computers, and ultra-small form factor computers and servers" would be restricted, with imports only being allowed for those holding a "valid Licence for Restricted Imports".
While the initial DGFT notification stated that the restrictions would take place with "immediate effect", IT Ministry sources told news agency PTI on Friday that companies would be given enough time to apply for licences to import laptops and other devices specified in the list of restrictions.
Despite the time now given to companies, the fact remains that the policy change will come into effect.
In light of the same, we examine the factors behind the policy change and how it is expected to impact people.
The China factor
Although the DGFT notice did not specify a reason behind the change in policy, the move is largely being seen as a push for the Centre's 'Made in India' scheme and a bid to reduce dependencies on China.
A glance through trade data released by the Ministry of Commerce and Industry gives us a broad picture of India's dependence on China with regard to the import of electronic goods such as laptops, computers etc.
Indeed, India's imports of the aforementioned class of electronic goods have been steadily rising. Whereas in 2019-20, India's imports of electronic goods stood at $5,352 million, that figure climbed to $10,382 million in 2021-22, before declining slightly to hit $8,785 million in 2022-23.
This fiscal, between April and May, India has already imported $1,200 million worth of these goods, indicating that these imports are not slowing down.
What is most noteworthy about these imports, however, is their source. Not only is China the biggest supplier of these goods to India, but Beijing has also consistently accounted for more than 50 per cent of such imports since 2019-20.
In fact, a look at India's cumulative imports of electronic goods since 2019 shows that China accounts for a whopping 59 per cent of these imports, with the remaining 41 per cent coming from other countries in the world.
Given this fact, a rise in indigenous manufacturing would not only help India reduce its dependence on its diplomatic and business rival but would also help indigenous manufacturers expand their footprint globally, as evidenced by India's growing exports of indigenously-made smartphones to the US.
The 'security' factor
Another factor behind the restrictions imposed on this class of electronic goods is concerns about 'security'.
Top sources in the government told PTI on Friday that the restrictions had been brought in to guard against electronic hardware coming in with "in-built security loopholes that may potentially endanger sensitive personal and enterprise data".
While the source did not take Chinese manufacturers by name, it should be noted that across the world, many red flags have been raised about cybersecurity with regard to Chinese-manufactured electronics.
What happens now?
While it remains to be seen when the import restrictions come into place, the clauses highlighted in the policy remain the same.
As far as exemptions are concerned, the restrictions will not be applicable to "Imports under Baggage Rules".
Further, the restriction will not be applicable for the import of one such specified device purchased via "e-commerce portals, through post or courier".
Exemptions will also be given for 20 such devices per consignment for the purpose of R&D, testing, benchmarking, evaluation, repair, re-export and product development purposes. After the goods are used for these purposes, the policy requires users to destroy these products or re-export them.
The policy also provides an exemption for the re-import of such devices that have been repaired abroad.
Finally, the policy gives another exemption for such devices that form an essential part of a "Capital Good".