India is poised to overhaul its import policy for laptops, tablets, and personal computers beginning in January, as the government seeks to boost domestic manufacturing and reduce dependency on foreign technology. This strategic shift aims to encourage companies, particularly giants like Apple, to establish more manufacturing capabilities within the country. The implications of this move could reverberate throughout an industry valued at $8 billion to $10 billion, fundamentally altering the landscape of the Indian IT hardware market, which has traditionally relied heavily on imports.

Government sources familiar with the discussions revealed that while a similar initiative to limit imports was abandoned last year amid pushback from industry stakeholders and lobbying efforts from the United States, the current administration believes that sufficient time has passed for companies to adjust to new manufacturing realities. “We have given the industry enough time to adapt,” one source noted, indicating that consultations with various stakeholders are set to commence next week.

As part of the proposed changes, India’s Ministry of Electronics and Information Technology (MeitY) is formulating a new import authorization system, which would require companies to obtain prior approval before importing devices. This marks a significant shift from the existing regime, which allows laptop importers to operate under an automated online registration system without prior clearance. With two-thirds of India’s demand for IT hardware currently met through imports—largely from China—the move represents a decisive step toward reshaping the country’s manufacturing dynamics.

Key players in the IT hardware sector, including HP, Dell, Apple, Lenovo, and Samsung, dominate the Indian market, where the overall IT hardware landscape is valued at nearly $20 billion. Despite this large market, domestic production currently accounts for only around $5 billion, according to consultancy Mordor Intelligence. By imposing stricter import regulations, the Indian government aims to foster local production capabilities and enhance the competitiveness of homegrown companies.

To ensure quality control and reduce the influx of low-quality devices, the government is also considering implementing minimum quality standards as part of its “compulsory registration order” for laptops, notebooks, and tablets. “We are working on such restrictions as global treaties stop us from any tariff action on laptops and tablets. It leaves us with few policy options to limit imports,” the second official explained. This initiative aligns with Prime Minister Narendra Modi’s vision of reducing India’s dependence on foreign technology and promoting homegrown solutions.

The federal electronics ministry has yet to issue a formal comment on the proposed changes. However, the trade ministry has indicated that any decisions regarding the new import management system will be made following extensive consultations with the electronics ministry and other stakeholders.

The shift in policy is expected to benefit domestic contract manufacturers such as Dixon Technologies, which has entered into partnerships with global firms like HP to produce laptops and computers in India. Dixon aims to meet 15% of the country’s total demand, showcasing the potential for local manufacturing to gain traction in the face of import restrictions.

To facilitate this transition, the government has introduced a key production incentive scheme for IT hardware, attracting participation from global firms like Acer, Dell, HP, and Lenovo. According to India’s electronic minister, many approved participants are prepared to commence manufacturing operations in the country. With federal subsidies totaling approximately $2.01 billion, India is committed to promoting domestic production and enhancing its self-reliance in the technology sector.

Recent data from research firm Counterpoint indicates a 4% decrease in imports of completely assembled laptops in the first five months of 2024 compared to the previous year. This decline is attributed to firms such as Lenovo and Acer ramping up local assembly for entry-level laptops, underscoring a growing trend towards domestic production.

Moreover, India’s emphasis on establishing “trusted sources” for electronics and communication devices is fueled by increasing concerns about cyberattacks and data theft. Prime Minister Modi has previously stated the importance of reducing reliance on foreign countries for communication technology, emphasizing the need for security and self-sufficiency in critical areas.

As part of this broader initiative, India is set to implement mandatory testing of “essential security parameters” for all CCTV cameras starting in April 2025. This move reflects a commitment to enhancing security standards across various technology sectors, further supporting the government’s goal of fostering a robust and self-reliant IT hardware ecosystem.

In conclusion, India’s impending restrictions on IT hardware imports signal a pivotal shift toward bolstering domestic manufacturing capabilities. As the government seeks to reshape the industry landscape, the focus on local production, quality standards, and national security will likely play a significant role in determining the future of the Indian IT hardware market. With ongoing consultations and a supportive policy framework, the country is positioning itself to emerge as a formidable player in the global technology landscape, fostering innovation and self-reliance in the process.

(Adapted from BusinessToday.in)