Highlights
- Indian government introduces licensing permits on imports of certain electronic devices.
- Active government incentives have led to growth in smartphone production and attracted semiconductor producers.
- Introduction of a $2 billion scheme to further support local hardware manufacturing.
- Major companies like Dell and HP have already set up manufacturing facilities in India.
- A goal to make India a global hub for electronic manufacturing is evident.
In a move to further support its domestic manufacturing sector, the Indian government announced that it will impose licensing permits on the imports of a range of consumer electronic devices, including laptops, tablets, all-in-one personal computers, ultra-small form factor computers, and servers categorised under HSN 8741.
This move is part of the government’s PLI 2.0 (production-linked incentive) for IT Hardware initiative that was announced back in May.
The Goal of this Scheme
- Deepening the nation’s manufacturing ecosystem.
- Encouraging the localisation of vital components and sub-assemblies.
- Extending the window for indigenous supply chain development.
Incentivising Growth
One of the standout features of the PLI Scheme 2.0 is its increased flexibility tailored for applicants. The scheme’s incentives are tied to incremental sales and investment numbers, ensuring participants strive for consistent growth.
What’s on Offer?
Companies venturing into manufacturing goods under the scheme’s target segment can expect an average incentive of about 5 percentage on their net incremental sales (from the base year) for a duration of six years.
Industry Reaction to the New Policy
Pankaj Mohindroo, the chairman of the Indian Cellular and Electronics Association (ICEA), commented on the new policy saying, “We assure the industry and trade that there will be no disruptions in supply chain because of this notification. Above all we assure consumers that all their loved brands will be available as always expressing confidence in the government’s strategy.”
He also stated that with this policy in effect, “the industry can grown from a level of Rs 25-30,000 crore to easily above Rs 1 lakh crore in a matter of two years. This will be a tremendous boost for the creation of jobs in the electronics manufacturing sector. I expect PLI 2.0 to create up to 1 lakh more jobs in the next three to four years.”
Industry Perspective: Unity and Ambition
In an interview with CNBC TV-18, Pankaj Mohindroo said that the industry has greeted this policy with both cheers and concerns, but the overarching sentiment is unity with the government’s strategy.
He emphasises India’s aspiration to reach the high table of IT and laptop manufacturing, mirroring its success in smartphone production, where India manufactures 20 percent of all global smartphones.
A Global Destination for Manufacturing
Mohindroo’s vision extends to making India a preferred destination for leading companies like HP, Dell, Asus, Apple, and Lenovo. He believes that comfort in manufacturing products in India is crucial for reaching the top of IT hardware and laptop manufacturing.
Regulation, Not Restriction
Addressing concerns, Mohindroo clarifies that this policy is a regulation rather than a curb on imports. He assures that the supply chain will remain unaffected and that there will be no disruptions for consumers or the industry.
He also emphasises the need for global partners to remain motivated and invest in India, promising that any concerns will be addressed, and solutions found.
Eligibility and Exemptions
Companies eager to seize this opportunity will have to align with the set eligibility criteria, focusing primarily on the manufacturing of goods within the specified target segment.
The window for application submissions under PLI Scheme 2.0 has been extended, with the deadline now set for August 30, 2023.
However, the import of a single laptop, tablet, all-in-one PC, or ultra-compact computer, even if bought from online platforms and delivered via post or courier, is free from the licensing mandate although applicable customs duties will be charged.
Global giants and their stake in India
Major companies, including Dell and HP, already operate manufacturing facilities in India. Furthermore, with initiatives like PLI 2.0, the Indian government is striving to make the nation an attractive destination for other global giants like Apple, Acer, Asus and its manufacturing partners.
Despite these efforts, India is still investing billions in importing laptops and other hardware.
Data shared in parliament last December revealed a growth of 32 percent in the import value of finished electronic goods, increasing to $43 billion in 2021–2022 from $32 billion in 2019–2020.
Nevertheless, schemes designed to encourage local production have shown positive effects. The imported share of finished electronic goods (including components) in total electronic goods imports reduced to 64 percent in 2021–22, down from 69 percent in 2019–2020.
Future of Local Manufacturing
Recent estimates from the Hong Kong-based research firm, Counterpoint, indicate that during the first half of 2023, approximately 30 percent to 35 percent of laptops and 30 percent of tablets shipped to India were manufactured locally.
The government’s persistent efforts to bolster domestic production reflect its long-term vision of reducing dependence on imports and establishing India as a major hub for electronic manufacturing.
FAQs
What is the new policy introduced by the Indian government regarding electronic imports?
The Indian government has announced that it will impose licensing permits on the imports of specific electronic devices, including laptops, tablets, and certain computers. This move is designed to bolster the domestic production of these items. Importers will now need a specific license to bring these products into the country.
Are there exceptions to this licensing requirement?
Yes, the new restriction offers a notable exception. Passengers traveling to India who have these specified electronic devices in their personal baggage for personal use will not need any licensing, ensuring that the general public is not inconvenienced during travels.
What has been the outcome of similar import restrictions in the past?
In the past, when India introduced a restriction on the import of smart TVs, there was a clear and significant uptick in domestic production. Analysts have noted that such policies tend to give a substantial boost to local manufacturing, providing a precedent for the potential success of the current regulation.
What are the government’s recent initiatives to support manufacturing?
A $2 billion scheme targeting local businesses producing hardware like laptops, PCs, and related equipment.
How has the introduction of such schemes impacted India’s imports?
India witnessed a 32 percent growth in electronic goods imports between 2019-2020 and 2021-2022, but schemes like PLI are designed to reduce this dependency and promote local production.
Also Read: Make in India: By 2027, Every 2nd iPhone Will Be Manufactured by India