On August 3, the central government announced strict license restrictions for the import of all types of computers, including laptops and notebooks. Following the criticism raised from various quarters, the government postponed it by saying that it would come into effect the next day, from the first month of November. Now, it has been postponed till next year with various relaxations.
It is a welcome decision to introduce certain import procedures to monitor imports related to the IT sector and allow hassle-free import of computers. It must be said that the government is now looking for an apology for the order issued in August without consulting the manufacturing companies related to computer technology and without giving any time.
Several reasons have been proposed for the central government’s decision to impose restrictions on the import of not only laptops and notebooks, but also important components required for its production. Those reasons aside, the government does not think that when restrictions are imposed on imports without giving enough time, production will be paralyzed and their prices will inevitably rise.
National security was cited as an important reason for the government’s sudden order. The reasons are that unreliable computer components can become security threats and leak private and government information. It is understandable that the government’s suspicion is indirectly related to computer types and components imported from China.
Even if it is true, it cannot be avoided by import control. More than half of the computers imported by India worth about $8 billion a year are manufactured in China. If regulation is introduced, there will be a shortage of computers and thus consumers will face severe price hikes. It will bring her name to the government.
It may also be the intention of the government to indirectly compel multinational computer manufacturing companies including Apple, Dell, HP, Samsung to set up factories and manufacture in India. No fault can be found in that intention. However, it may not be an immediate action. You cannot go into production without establishing the basic framework for it.
In July 2020, the government announced such a licensing system for importing color TV sets. It encouraged manufacturing in India by providing certain concessions to import spare parts. Imports of color TV sets have reduced to 0% from 36% then. Foreign companies are joining forces with Indian companies in manufacturing. However, even now important auto spare parts are imported.
A similar situation should not occur in computers. Multinational companies can offer critical components and manufacture their products in India. Even after announcing some incentives for computers manufactured in India in February 2021, this announcement may have been made to force them as no one came forward.
The biggest hindrance to the central government’s plan to manufacture in India is the free trade agreement we have with the ‘ASEAN’ organization of East Asian countries. Since IT hardware can be imported from ‘ASEAN’ countries, Chinese products cannot be stopped completely.
India imported computers worth $7.37 billion in 2021-22, which has declined to $5.33 billion in 2022-23. After China, computers are imported from Singapore and Hong Kong. Let’s not forget that a significant number of components in all of them are made in China.
Rs 17,000 crore has been earmarked in the budget to promote computer hardware manufacturing through a manufacturing-linked incentive scheme. If Indian products are guaranteed to be of international standards and prices remain unchanged, nothing could be happier. There is no doubt that responding to Chinese products and making India a manufacturing hub is a welcome goal.
The government has come to the right decision in the problem of import control!
