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Journalism of Courage
IT TOOK 24 hours of chaos in the supply chains of some of the biggest hardware companies — their consignments stuck at customs, and a day-long queueing up at the office of the Directorate General of Foreign Trade (DGFT) for the government to take note and give companies another three months for obtaining a valid licence to import laptops, personal computers, tablets and other devices.
On Thursday, the DGFT issued a notification that required companies to get a licence before importing computers and laptops. The move shocked the entire industry given its timing – right before the festive season, and only added to the headache of manufacturers already grappling with a global glut of inventory and few triggers to restart sales growth.
Given the outrage and the immediate adverse impact, the DGFT issued a notification Friday that now gives the industry a three-month reprieve. In other words, imports of laptops, personal computers, and tablets, will be ‘restricted’ from November 1 and companies will have time till then to obtain a valid licence from the DGFT.
“This is licence raj… There is no other way to put it,” said an executive from a top electronics company, who did not wish to be identified. “How can they bring something like this with literally zero consultation,” asked another executive. But they were relieved they got time to obtain the licence.
THE MOVE to restrict imports of laptops, PCs and tablets has left the industry shocked, not just because it is protectionist, but also because it gives discretionary power to bureaucrats who would issue licences. Although it gives them time to get the paperwork done, it flies in the face of the efforts to move up the ‘Ease of Doing Business’ rankings.
Industry bodies were on back-to-back calls throughout the day with their member companies – including Apple, Samsung, HP and Dell – to strategise their next steps. The entire experience has been bitter for the industry. A third executive said that in recent meetings with the IT Ministry to discuss the government’s recently-renewed Production-Linked Incentive (PLI) scheme for IT hardware, officials had been hinting at introducing non-tariff barriers to encourage domestic manufacturing.
“But it never seemed like there was coercive action on the anvil. They never explicitly told us about the import restriction, and we felt it would be introduced but at a later date and with enough time to prepare for it,” the executive said.
“Then, the decision on Thursday spooked everyone, we were never consulted.” Given the urgency of Thursday’s notification (to be implemented with immediate effect) prompted customs officials to act immediately. “Consignments of many companies were stuck at customs because of the chaos that ensued after the notification,” an industry executive said.
This led to another round of anxiety for the companies – what happens to the consignment that is currently on its way to India? This was the key question that executives who had lined up at the DGFT on Friday were asking the agency’s officials. The uncertainty also prompted companies like Apple and Samsung freezing imports till the time there was clarity on the issue.
Multiple industry sources said the government’s action stemmed from the fact that its Production-Linked Incentive (PLI) scheme for IT hardware was finding little traction so far. The scheme was revised in May with an outlay of Rs 17,000 crore, double of what was first cleared in 2021.
Sources at the IT Ministry, though, contested this. They said that 44 companies have so far registered for the scheme, with two – one being HP Enterprises – having submitted their applications detailing their investment and manufacturing plans.
Responding to the concerns expressed by many on the government decision, Minister of State for IT Rajeev Chandrasekhar said this was “not at all about licence raj”. “The government’s objective is to ensure availability of trusted hardware and systems, reduce import dependence, and increase domestic manufacturing of these products,” he said in a tweet.
Two officials in the IT Ministry claimed that having licence requirements in place would help the government assess the volume of laptops being imported, and the top countries exporting these. This data is, however, tracked by the Commerce Ministry as part of its export-import data bank.
The country which exports the majority of laptops and computes to India is China. More than 75 per cent of India’s total $ 5.33 billion imports of laptops and personal computers in 2022-23 was from the neighbouring country. Some in the government also claimed that the licensing requirement would help enhance the cybersecurity infrastructure of the country.
Asked how it will actually help them in knowing whether a particular laptop was a potential security threat, a senior IT Ministry official said, “You are aware of the security situation, it is on the news every day.”
A section within the government is not entirely convinced with the decision. “Given the push for digitalisation and efforts to go notches up in the Ease of Doing Business index, this signals a move away from reforms. The decision does not go well with the government’s larger promise of doing away with licence raj or increased bureaucracy or discretionary powers that delay availability of products,” said a government source, who did not wish to be identified.
