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India grants one-year import relief for IT hardware products

Apple, HP, Lenovo, Dell and other companies will get a one-year window to freely import laptops, PCs, servers and other IT hardware products under a new import management system that takes effect on 1 November, three people aware of the development said.

The ministry of electronics and information technology conveyed this to the companies at a meeting regarding the import management system on Friday, the people said on the condition of anonymity.

This flexibility is intended to allow companies to develop local manufacturing capabilities, and the government will begin imposing restrictions, starting November 2024, reducing the percentage of imports permitted each year.

“Registrations under the import management system will begin from 1 November, but the import restrictions will begin a year later. There will be a sunset clause to the restrictions, which will be 2030, after which it will be reviewed,” one of the people cited above said.

Imports will be curtailed in a staggered manner. After November 2024, import quantities will be determined on factors including the amounts imported in the previous year, products made locally in the previous year and quantities exported from India in the previous year.

“The industry has suggested that FY23 should not be kept as the base year for determining the import quantities since it has been a low-performance year for most companies in the IT hardware space,” a second person said.

Executives aware of the discussions said that most companies were keen on beginning local production by 2025, with a few likely to begin next year. This aligns with the production-linked incentives (PLI) scheme for IT hardware —laptops, tablets, all-in-one personal computers, servers and ultra-small form factor devices—offering eligible companies incentives worth ₹17,000 crore over six years.

Spokespeople for Meity, HP, Dell, Apple, and Lenovo did not respond to queries as of Friday evening.

Companies will choose between FY24 and FY25 to begin availing of incentives under the scheme. The government expects to draw investments of ₹5,000 crore, generating 75,000 direct jobs and incremental production worth ₹4.7 trillion.

“The government has assured that there will not be any supply chain disruptions, which will also help in ensuring that companies wanting to build their local manufacturing capacities face any hiccups,” a third person aware of the meeting details said.

India plans to introduce the import management system to permit the import of laptops, servers and other IT hardware products from trusted jurisdictions. Imports from non-trusted jurisdictions will be limited to a certain number of units, Rajeev Chandrasekhar, minister of electronics and IT, said in an interview last week.

India first proposed imposing restrictions on imports of IT hardware products in the first week of August but delayed the implementation after opposition from the industry, which argued that the sudden stoppage would impact consumers and raise prices.

Many companies based in the US also sought government-backed intervention in putting a stop to the import restrictions. Notably, in a meeting with commerce minister Piyush Goyal last month, US trade representative Katherine Tai also raised concerns that stakeholders should be engaged in the policy regarding import licensing requirements and the move should not adversely impact US exports to India. Livemint

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