The Indian government has announced new restrictions on the import of pre-built laptops, desktops, tablets, and convertibles. These restrictions, which take effect immediately, are designed to encourage major PC manufacturers to set up manufacturing operations in India.
The restrictions are similar to those imposed by the government in 2020 on the import of televisions. That move led to a surge in local manufacturing, as major TV brands rushed to set up assembly lines in India.
The new restrictions on laptops and other PCs are likely to have a similar impact. The Indian market is one of the world’s fastest-growing for PCs, and the government is hoping that by forcing manufacturers to set up local operations, it can capture more of the value chain.
The restrictions are likely to have a mixed impact on consumers. On the one hand, they could lead to higher prices for laptops and other PCs. This is because manufacturers will have to factor in the cost of setting up and running local operations.
On the other hand, the restrictions could also lead to better quality products. This is because manufacturers will be more likely to invest in research and development if they are producing products for the Indian market.
Will it stop companies to sell in India?
India’s current import restrictions on smartphones and TVs have resulted in most consumer electronics giants establishing assembly lines in India. However, the majority of the product is simply knocked down and put together. Although manufacturers are incentivized to localize more of their value-added through the country’s performance-linked incentives (PLI) program.
Certain whitebox ODMs have even localized PCB placement and display panel manufacturing. In just Q2-2023, India’s ICT imports totaled $19.7 billion, and the country generates roughly $75-90 billion in ICT/PC sales each year.
With the total Laptop/PC market size close to 8 Billion dollars annually and approximately 65 percent of units being imported, the government’s move is aimed at promoting domestic production and reducing dependence on imports. The industry comprises around 12 million units, and this restriction may lead to some short-term supply disruptions, especially for brands like Apple, HP, and Lenovo.Counterpoint’s Research Director, Tarun Pathak, told India Today.
There is no doubt that no company would want to give up on the Indian market and that is exactly what Indian government is trying to leverage. In addition to the restrictions on imports, the government is also offering incentives to companies that set up manufacturing operations in India. These incentives include tax breaks and access to government procurement contracts.
However, it is worth noting that the government’s strategy aligns with their recent announcement to extend the application window under the PLI Scheme 2.0 for IT Hardware, offering better incentives to encourage local manufacturing. India has made remarkable progress in achieving almost 100% local manufacturing for smartphones and TVs, but the IT hardware segment has lagged behind, with only 30-35% of products currently being Made in India. This move signals a strong push to bridge that gap and enhance the local production of laptops, tablets, and personal computersTarun Pathak, Counterpoint’s Research Director
In the short term, this could lead to higher prices for laptops and computers in India. However, in the long term, it could lead to lower prices as companies become more efficient at manufacturing in India.
The government has also announced some exceptions to the import restrictions. For example, people can still bring laptops and computers into India for personal use. Additionally, companies can import up to 20 pieces of laptops and computers per consignment for research and development, testing, benchmarking, and repair purposes.
Overall, the import restrictions are a positive step for the Indian IT industry. They will help to boost local manufacturing and create jobs in India. In the long term, they could also lead to lower prices for laptops and computers in India.
The government’s efforts to boost local manufacturing are likely to face some challenges. The Indian IT sector is already highly competitive, and there are many well-established players in the market. However, the government is confident that its measures will be successful in attracting new investment and creating jobs.
The new restrictions on the import of laptops and other PCs are just one part of the government’s broader strategy to boost manufacturing in India. The government is also investing in infrastructure and education, in an effort to create a more conducive environment for businesses.