5th August 2023 (5 Topics)
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Import Ban on laptop, PC
Context
The Directorate General of Foreign Trade (DGFT)has delayed notification restricting imports of laptops, PCs, tablets and servers to Indiawith immediate effect to November 1, 2023.
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Directorate General of Foreign Trade (DGFT): It is responsible for formulating and implementing the Foreign Trade Policy with the main objective of promoting India's exports. The DGFT also issues scrips/authorization to exporters and monitors their corresponding obligations through a network of 24 regional offices. |
About the move:
- The Union government has restricted imports of personal computers, laptops, palmtops, automatic data processing machines, microcomputer/ processors and large/ mainframe computers with immediate effect.
- Under this move, seven categories of HSN Code 8471 (HSN is the Harmonised System of Nomenclature, a globally accepted method of naming goods) were restricted.
- However their import would be allowed against a valid licence for restricted imports.
- Also, the licence for restricted imports shall not be required for the repair and return of re-import of goods repaired abroad, as per the Foreign Trade Policy.
Exemptions given:
- The import of 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, has been exempted from licensing requirement. It will attract payment of duty as applicable.
- Imports up to 20 items per consignment for R&D, testing, benchmarking, and evaluation repair and re-export, and product development purposes, have also been exempted from import licence.
- The government has also exempted laptops, tablets, all-in-one personal computers, and ultra-small form factor computers from import licensing requirements if they are essential part of capital goods.
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Current regulations permit companies to import laptops without any restrictions. |
Significance of the move:
- The move was aimed at promoting domestic manufacturing, and probably targeted at China since more than 75 per cent of India’s total imports of laptops and personal computers in 2022-23 were from the neighboring country.
- The fresh restrictions could impact companies such as Apple, Samsung and Acer, forcing them to step up manufacturing and assembly in India.
Need of such a move:
- India has seen an increase in imports of electronic goods and laptops/ computers over the last few years.
- During April-June 2023, the import of electronic goods increased with a share of 4-7 per cent in overall imports.
- Majority of these imports were coming from China.
India’s plan to boost domestic production:
- The Government of India, from time to time, takes appropriate measures to regulate import of goods including those related to national interest.
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- To support and expand domestic capacities, Government has implemented policies to promote domestic manufacturing like the production linked incentive (PLI) schemes in line with Atmanirbhar Bharat policy.
- Recently, to encourage domestic production of lithium-ion cells for batteries used in electric vehicles (EVs), the government has removed customs duty on the import of capital goods and machinery used in the manufacturing of lithium-ion cells.
- The reduction in basic customs duty will reduce input costs and is expected to deepen value addition, promote export competitiveness and boost domestic manufacturing.
Concerns associated:
- The move could also potentially raise prices for consumers, depending on how the licensing norms are implemented.
- There will be a shortage of products in the market, exacerbating the supply chain issues caused by the Covid-19 pandemic and the semiconductor crisis.
Way Ahead:
- The weakness in India’s exports is likely to sustain because global growth is likely to remain weak. Weaker exports, in turn, will have a dampening effect on the growth of India’s gross domestic product (GDP).
- The government urgently needs to bring out a revised foreign policy to address both our historical trade imbalance.
- The government should take appropriate measures to improve the credit cycle through investment and savings and promotion of foreign investment will bring the economy from slowdown in future.
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