India is to impose a licensing requirement for imports of laptops, tablets and personal computers with immediate effect. What does that mean for companies like Apple and Samsung? Will it boost local manufacturing? And how will it affect prices?
Local press quotes the Directorate-general of Foreign Trade, a part of the Indian Ministry of Trade and Industry, as saying: “Import of laptops, tablets, all-in-one personal computers and ultra small-form factor computers…shall be ‘restricted’,” and thus will require a “valid license for restricted imports”.
The introduction of licensing might slow the import process down considerably, making it more difficult to introduce new models at a preferred time. Indeed, as Reuters points out, and manufacturers are no doubt aware, this could be a big problem with an Indian festive season on the way and the consequent boost in demand.
Contract manufacturers may welcome the news but other companies will have to consider adjusting a business model whereby laptops and tablets are largely imported. There may also be short-term price rises if supply fails to meet demand.
Reuters says India's electronics imports, which include laptops, tablets and personal computers, stood at US$19.7 billion in the April to June period. Laptops, tablets and personal computers account for about 1.5% of India's total annual imports, with nearly half of those from China, according to government data referenced by the news service.
Frustratingly for manufacturers, the government has not explained why the move has taken place but there is a strong body of opinion arguing that the aim is to encourage manufacturing in India, a government strategy for some while.
Indeed this new requirement may well align with government plans to extend the application window under the PLI (Production Linked Incentive Scheme) 2.0 for IT hardware, offering incentives to encourage local manufacturing.
This seems to have had the desired effect on smartphones and TVs, both of which are now almost 100% locally manufactured. However, only 30-35% of products in the IT hardware segment are currently locally produced.