Import Relief for IT Hardware Companies as India Encourages Local Production

Major IT hardware companies have held talks with the Indian government, leading to a postponement of import curbs, initially rescheduled to November 1, 2023 and then November 1, 2024. Now, the focus is on promoting local production alongside setting up a new import management system to be run by the DGFT. Per reports, the registration window is now open.

How the registration process works for companies importing IT hardware

The Directorate General of Foreign Trade (DGFT) has initiated the registration process for companies interested in importing IT hardware, including laptops and tablets. They aim to streamline the approval of applications to within one week.

Per reporting from The Economic Times (ET), companies are required to furnish details regarding the value and volume of their IT hardware imports and exports, as well as their domestic manufacturing activities for the past three years. Additionally, firms are obliged to disclose the country of origin for their imports.

Officials told ET that companies have the option to provide feedback if any adjustments are needed. On September 25, representatives from the IT hardware sector met with officials from the Ministry of Electronics and Information Technology (MeitY) to deliberate on the registration procedure.

What is the validity of the import registration?

The registration will initially be effective from November 1, 2023, until September 30, 2024. Starting from October 1 of the following year, a mechanism for granting import authorizations with quotas will be implemented. These authorizations will be subject to annual renewal.

An official told ET, “Companies are required to obtain a single registration/authorization, which will be applicable at all ports.” Companies must present the registration certificate to the customs department when importing IT hardware from November 1, 2023 onwards. At present, there are no quantity restrictions, but the government will begin monitoring import details.

India offers import relief with riders for IT hardware companies

In media reports dated September 22, it was revealed that major IT hardware giants like Apple, HP, Lenovo, and Dell might receive a one-year extension before the enforcement of import license requirements, originally scheduled for November 1, 2023. This extension implied that the licensing requirements for importing items within the HSN 8741 category, including laptops, tablets, and personal computers (PCs), would now come into effect on November 1, 2024. The one-year grace period was to allow these IT hardware companies to establish localized production capabilities, a key objective for the Indian government.

On the subsequent day, September 23, ET reported that the Indian government is considering not implementing its planned import restrictions on items falling under the HSN 8741 category, which includes laptops, tablets, servers, etc.

Instead, India intends to manage inbound shipments of these products through an import management system, as informed by officials familiar with the matter to ET.

After a period of six to eight months / after October 2024, an import authorization mechanism will be implemented to allocate quotas to firms importing IT hardware.

Over the next three years, the government’s objective is to fulfill as much as 70 percent of India’s IT hardware demand through domestic manufacturing, thereby diminishing reliance on imports from untrustworthy sources. Hence, the import relief is to get the industry prepared.

Companies start production in India under IT Hardware PLI Scheme

On August 31, the government told media that 10 out of the 40 firms that submitted applications for the government’s updated production-linked incentive program for IT hardware ( IT Hardware PLI 2.0 scheme) have initiated production as of July 1, 2023. An additional 25 companies intend to commence manufacturing in India by April 1, 2024. By April 1, 2025, five more companies are expected to start production.

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The government had received 40 proposals worth INR 50 billion under the IT Hardware PLI 2.0 scheme. However, not all of them were approved, as the government has a fixed budget for incentives, with an allocated budget of INR 17 billion (US$204.56 million), according to officials cited by the ET.

Moreover, in an ET report from September 25, it appears that global IT hardware firms may be talking to local OEM players that have applied to the PLI scheme to manufacture in India or scale up local production capacity. Asus, Acer, HP, and Lenovo have been negotiating with OEM firms like US-based Flextronics Technologies and Dixon Technologies.

The six-year PLI 2.0 scheme for IT hardware, covering laptops, tablets, all-in-one personal computers, servers, and ultra-small form factor devices, aims to attract top hardware companies. PLI Scheme 2.0 for IT hardware was approved in May of this year, following the earlier PLI 1.0 issued in 2021 with a budget outlay of INR 73.5 billion (US$884.42 million).

The government anticipates a cumulative investment increase of INR 50.10 billion from the 40 applicants, among them prominent global IT hardware companies like Dell and HP, under the revamped PLI scheme.

(US$1=INR 83.11).

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