Cronyism or protectionism? India halts import of electrical items

• Importers must now apply for licenses to bring electronic devices into India.
• The announcement comes days after India’s Reliance Jio launched its affordable JioBook laptop in the country.

In July 2020, the Prime Minister of India, Narendra Modi, and his administration imposed restrictions on smart TV imports, mainly to contain sources from China and boost local manufacturing. This month, replicating its move with foreign smart TVs, the central government announced that it is imposing restrictions on the import of laptops, tablets, all-in-one personal computers (PCs), ultra-small computers, and servers.

The restriction would mean that importers must apply for licenses to bring laptops, tablets, PCs, and other electronic devices into the country, according to a notice issued by the Ministry of Commerce and Industry on August 3, 2023. While the ministry didn’t provide a reason for the change in rules, it is commonly known that Modi has aggressively pushed his “Make in India” campaign, which promotes local manufacturing to create more jobs. 

According to Reuters, India’s electronic imports stood at US$19.7 billion from April to June, up 6.25% from the same period in 2022. The newly-announced import rule will go into effect on October 31, and, according to the notification, the government will permit import against a valid license for restricted products. The restriction will also not apply to passengers carrying the mentioned devices in their baggage.

“Exemption from import licensing is allowed for one laptop, tablet, all-in-one Personal Computer or Ultra small form factor Computer, including those purchased from e-commerce portals, through post or courier, subject to applicable duty payment,” according to the notification.

So far, according to a Bloomberg report, computer vendors including Dell, Apple, and Samsung promptly moved to comply with the notification last week and froze all new imports. “This restriction may lead to short-term supply disruptions, especially for brands like Apple, HP, and Lenovo. Moreover, with the festive season approaching, a significant period for sales, the industry may face challenges in meeting demand,” Tarun Pathak, research director at Counterpoint Analysis, told Quartz.

Imported vs. Jio laptops

The government’s import restriction announcement comes days after Reliance Jio launched its affordable JioBook laptop in the country. As per the Amazon and Reliance Retail listing, the JioBook has a maximum retail price of Rs 25,000. Notably, this is the company’s second attempt in the laptop/notebook market of the country. 

It initially tested the waters with the JioBook (2022) to gauge consumer interest. Unfortunately, it did not see much success, partly due to weak marketing efforts and weak hardware specifications vis-a-vis Windows laptops. What many Indians seem to be agreeing on now, following the government’s announcement, is the fact that the move could be cronyism. 

Most laptops and personal computers sold in India are manufactured or assembled in China. Ironically, even the newly launched JioBook is being manufactured in China. But with the new rule, the government plans to shift all this to India. If that happens, the prices of these gadgets can go down. 

Sunil Vachani, founder and chairman of Dixon Technologies, an Indian electronics manufacturing services company, said the landmark decision would translate to India emerging as one of the largest hubs for manufacturing IT products. “I see a time where Indian manufacturers and India as a country will be catering to global requirements for IT hardware products. This will translate to massive employment, new factories created to cater to this requirement.”

While some argue that the protectionism of India’s trade will lead to its growth, others feel it will drag the country’s long-term trade. For now, it is too soon to predict how it’ll play out, but if past moves are of any indicator, the restriction imposed on the imports of smart TVs has augured well for local manufacturers.

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