Govt should announce objective criteria for importers of computers, laptops for granting licences: GTRI

New Delhi: With India imposing import curbs on laptops and computers, the government should take steps such as announcing objective criteria for importers to seek licence for inbound shipments of these items to meet domestic demand, trade think-tank GTRI said on Friday.

On August 3, the government said importers of these goods have to seek a licence/permission from Directorate General of Foreign Trade (DGFT) for imports.

“PCs, laptops, and tablets connect us to the world of education, business, entertainment and everything else. The government must take all steps to avoid short supply and market disruption. One way is announcing objective criteria that will constitute the basis for the grant of licence,” Global Trade Research Initiative (GTRI) co-founder Ajay Srivastava said.

In similar cases earlier, criteria like past performance have been used for granting licences.

He said the government may inform all firms of their next year's annual import eligibility in terms of the number of units and value in advance.

“This will save the government from the charges of discrimination and discretion and help firms plan their operations. There will be no need for firms to make applications for licences. The government may also use DGCI&S firm wise data for quantifying incentives,” he said.

Kolkata-based Directorate General of Commercial Intelligence and Statistics (DGCI&S) is an arm of the commerce ministry. It is an official organization for collection, compilation and dissemination of India's trade statistics and commercial Information.

Then, GTRI said India would also be dragged into disputes by members of the World Trade Organization (WTO).

But as the WTO disputes body is dysfunctional, India may have time to respond. India may take the national security plea saying unchecked imports constitute a national security threat, it said.

“This may sound hollow, but the US has used the same logic while imposing additional tariffs on imports of steel and aluminium to support the American industry. Laptops constitute a bigger threat than steel, lawyers may argue,” it added.

The basic customs duties on laptop, PC and similar products in India is zero. India cannot increase this duty as it has committed to zero duty on computers and many IT-related products by signing an Information Technology Agreement (ITA) in 1997.

“The only option to check import was requiring firms to obtain Government permission before importing. Restricting imports is a more severe measure as the government can now restrict the value of imports or who will import,” it added.

India's imports of affected products was USD 8.8 billion in 2022-2023. The two key products are PCs/laptops, tablets (imports of USD 5.3 billion), and Wifi Dongles, Smart Card Reader, Android TV Boxes etc. (USD 2.6 billion).

The import value of products covered under the remaining five tariff lines or product categories like data processing machines  was USD 870 million in 2022-23.

The global exports of PC/laptops were USD 163 billion in 2022. China is the undisputed leader with an 81 per cent share.

Germany, with a 3.5 per cent share, is a distant number two. Top firms Lenovo, Apple, Dell, and HP make most of the laptops/PCs in China.

“Most electronics products, including laptops, are made of lakhs of components woven into many subassemblies. China looks unbeatable as they make all components. Any new country willing to make laptops has to initially import most such components from China,” it said.

India has announced a PLI (production-linked incentive) scheme offering a 4 per cent incentive on incremental production.

It said that though few firms got approval, there were no major takers as import duty on all products in this category was zero.

“The government increased duty on mobile phones to 20 per cent to provide upfront tariff walls, which helped production take off rapidly. Not possible for laptops due to ITA. The local build-up may not be rapid. Firms may approach the government to cut duty on critical components like PCBA, which may conflict with other PLI schemes.

“We may be dependent on China for many years for the supply of subassemblies and components. India is a big expanding market; we must try to make laptops, PC and other products whenever we go beyond simple assembly of subassemblies/components,” Srivastava said.