This is an archive article published on October 21, 2023

Opinion On licence raj in laptop imports, government does well to reconsider

Express View: A more prudent approach would involve creating a more conducive environment for development of a strong and vibrant manufacturing ecosystem. The policy framework must be geared towards ensuring greater openness and more freedom to operate

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The policy framework must be geared towards ensuring greater openness and more freedom to operate.

October 21, 2023 07:05 AM IST First published on: Oct 21, 2023 at 07:05 AM IST

In August, the central government had issued an order imposing licensing requirements on the imports of laptops, tablets and other devices with immediate effect. The rationale for the move was ostensibly two-fold: One, to provide a fillip to domestic manufacturing, and two, to curb imports from China.

The move came under severe criticism as it raised the spectre of the government marching back to the era of the infamous licence permit raj. There were fears that such a regime could lead to the imposition of import quotas, create space for arbitrary action in other sectors, and increase the room for bureaucratic discretion, hurling India back by decades to a time many bad economic policy ideas can be traced to.

The government, subsequently, deferred the deadline for the implementation of the licencing requirement. But the contentious policy continued to draw criticism from all quarters. For instance, at a recent meeting of the World Trade Organisation, countries like the US, China, South Korea and Taiwan raised concerns over this move. The government has now modified its position on the issue. This is welcome.

On Thursday, it rolled out an import management system for IT hardware, which includes laptops and computers. Under the new system, companies will only have to register and reveal data that relates to their imports, and the country of origin. As reported in this paper, the system will help to monitor imports and ensure that items come from trusted sources. There are carve-outs for special economic zones, hardware that is essential for capital goods, among others. The system will be faceless and contactless, ensuring a hassle-free experience for importers. However, companies in the “denied entity list” will not receive authorisation for imports.

While the government has done well not to press ahead with its earlier plan, this episode is unfortunately not the only instance where it had considered such a policy approach. Proposals such as bringing credit card spending outside the country under the liberalised remittance scheme underline concerns over the government’s inclination to adopt the playbook of a long-gone era, when the state machinery exercised greater control over every aspect of the economy.

This backsliding must be avoided. In this specific case, a heavy-handed attitude, imposing licensing requirements, is the wrong way to pursue its objectives. The government has already put in place a production-linked incentive scheme for IT hardware.

And as per reports, several firms, both contract manufacturers and original equipment manufacturers, have applied under the scheme. A more prudent approach would involve creating a more conducive environment for development of a strong and vibrant manufacturing ecosystem. The policy framework must be geared towards ensuring greater openness and more freedom to operate.