The Union government is considering extending the deadline for restricting imports of laptops, desktops and tablets as local production of some of these items has picked up but not enough to replace imports.
A year ago, India abruptly banned imports of certain computer hardware products, but the order was reversed following demands from industry representatives, the US Trade Representative and global manufacturers such as Dell, HP and Lenovo. In October, the government proposed introducing a system to license such imports within a year.
“We are analyzing data on imports and local production. There is still time, we will make a decision based on the results,” said a senior official who asked not to be identified.
According to Counterpoint Research, 11.8 million laptops were sold in India in 2023, of which local production accounted for only 30-35%. The market is expected to have grown to around 13 million, with local production exceeding 40% levels.
After India introduced a production-linked incentive (PLI) scheme for laptops, tablets and other IT equipment, some global companies have started expanding their existing local production footprint, but most of them will start production only next year, industry executives said.
“The government is aware that investments have been committed and manufacturing will take place, so while they are reviewing the data and the timeline, they have also assured that the industry is moving in the right direction and production will pick up,” an executive at one of the laptop makers involved in the consultations with the government said on condition of anonymity.
Card data analysis
Ministry of Electronics and Information Technology Secretary S. Krishnan told Mint in an interview last month that the government would start analysing import data of laptops, servers and other IT hardware products on a quarterly basis, before deciding to implement the import management system. The government will focus on so-called reliable sources while taking a final call on this matter, Krishnan had said, referring to countries that export goods to India.
The government has been working to increase local manufacturing of consumer gadgets, considering that many items made in China pose a national security concern. India imported laptops and PCs worth about $3.8 billion from China in fiscal year 2024, accounting for 77.7% of India’s imports in this sector, according to data from the Global Trade Research Initiative (GTRI) released last week.
“Asus, HP and Dell have started manufacturing locally. Lenovo and Acer are also doing so now. But we don’t know if they will do so at a pace that will allow for import substitution. Suppliers are still not ramping up production fast enough and local assembly is still 6-8% more expensive than imports. The government may come back to apply pressure in October when the deadline for renewal of major agreements approaches,” said Navkendar Singh, associate vice president at IDC India, a technology research firm.
Falling import volume
Imports of laptops have fallen by 5-8% in volume over the past few quarters, Singh added, largely because Lenovo and Acer have ramped up local assembly of entry-level laptops targeting SMEs, government and public education. “Other vendors continue to import large volumes. For now, they are assembling them locally on demand, based on tender requirements,” Singh added.
“With the Indian government’s push to increase local manufacturing, laptop original equipment manufacturers (OEMs) are ramping up their local manufacturing operations in India, either by expanding in-house facilities or deepening partnerships with contract manufacturers,” said Prachir Singh, research analyst at Counterpoint Research.
According to Counterpoint data, imports of fully assembled laptops during the first five months of 2024 fell by 4% compared to the same period in 2023. Laptop imports increased by 42% in July-December 2023, compared to the previous six-month period, while a decline of 29% was observed in the period from January to May 2024, compared to the previous six-month period.
Local in telecommunications
The government has already ensured that products used in telecom infrastructure are manufactured locally and that imports are allowed only from “trusted sources”. In this context, supplies from Chinese suppliers have been blocked. The government believes that local production of IT hardware should take off thanks to the success of mobile phone manufacturing, where now 96% of the over 146 million smartphones used every year in India are made in the country. The PLI scheme for mobile phones has seen investments of $100 million. ₹8,282 crore till June 2024, and all major brands including Apple, Google, Xiaomi, Oppo, Vivo and others will manufacture their devices in India.
The government introduced the first PLI scheme for IT hardware products, which did not take off, but the PLI 2.0 that was introduced in May 2023 managed to attract ₹464.66 crore in investments by 27 companies, according to data from the Ministry of Electronics and IT in July this year.
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