CENTRE ROLLS BACK PLAN ON PC IMPORT CURBS

Why in the News?

The central govt. has rolled out an ‘import management system’ for IT hardware, including laptops and computers, withdrawing its earlier notification on import curbs.

• This comes after concerns were raised by US, China, South Korea and Taiwan at a recent World Trade Organisation (WTO) meeting.
• However, India introduced the curbs as a security measure, rather than a trade consideration.

Imports of electronic goods in India:

1. The imports of electronic goods and laptops/ computers have seen an increase in the last few years.
2. The Domestic production of electronic goods has register a CAGR of 15% comparing 2016-17 and 2021-22 figures.
3. The IT hardware manufacturing capacity and capability has reduced progressively over the years and many companies have ceased operations or are operating at lower capacities, and the increasing demand has been met largely through imports.
4. During April-June 2023, the import of electronic goods increased to $6.96 billion from $4.73 billion compared to 2022 levels, with a share of 4-7% in overall imports. 
5. The highest share of imports is in the category of personal computers including laptops, and palmtops.
6. China a Special Economic Zones (SEZs) ccounts for nearly 70-80% of the share of India’s imports of personal computers, laptops.
7. Certain firms have been excluded to apply for this authorisation, which includes:
   1. companies in the “denied entity list” 
   2. firms which have defaulted export obligations by availing benefits of schemes such as Export Promotion Capital Goods (EPCG).
   3. Companies having DRI (Directorate of Revenue Intelligence) cases against them.
   4. Companies looking to import second-hand goods or refurbished items.

The ‘import management system’ for IT hardware:

1. The proposed system requires IT hardware companies to register and disclose data related to their imports and countries from which they import.
2. The move intends to check imports of laptops and computers, as a majority of them are imported from China.
3. Exemptions provided:
   1. Imports by Special Economic Zones (SEZs) along with imports of spares, parts, assemblies, sub-assemblies, components, and notified IT hardware items essential for capital goods.
   2. Activities like re-packing, labelling, refurbishing, testing and calibration alone within the SEZ.
   3. No restrictions shall be placed on imports under baggage rules, and import of one laptop, tablet, personal computer or ultra-small form factor computer, including those purchased from e-commerce portals through post or courier.
   4. Private companies importing these goods for supply to Central and state government agencies or undertakings or for defence purposes
4. The proposed system shall be an “end-to-end” online system used to monitor imports and ensure such items come from trusted sources.
5. The new system will ensure a faceless and contactless and hassle-free process for importers to fill in the entire application process in about 10 minutes in an automated system.

About:

The Import curbs in detail:

1. The import of items categorized under the Harmonized System of Nomenclature (HNS) 8471 which includes automated data processing machine and units shall be restricted.
2. The sale of them to the customers shall require a valid license for importing.
3. Exemption to licensing requirements shall be applicable in 4 circumstances:
   1. Purchasing a single unit from e-commerce platforms that are broad into the country from abroad through post or courier.
   2. For reimport of products meant for repair and return.
   3. Applicable to Certain purposes such as R&D, testing, benchmarking and evaluation, repair and re-export or product development for up to 20 such items of import in a consignment.
   4. Can be imported if they serve as an essential part of an entity’s capital goods.

Rationale for the import curbs:

1. Reduce dependence on imports

2. Increase the domestic manufacturing of products.

3. With increasing demand for electronics hardware that is expected to reach $300 billion by FY2026, India’s forex drain for import of such electronic goods can be minimized by the move.

4. Big vendors except Apple and Asus have a ‘local assemblies’ to assemble the desktops and some budget notebooks. The import curbs will accelerate the local assembly process and helps to build an ecosystem around it.

5. The move shall provide an opportunity to build a manufacturing base and fix the impacts of pre-mature industrialization in India.