Context: 

Recently the Government of India imposed restrictions on the import of laptops, PCs, tablets, etc.

• Earlier the decision was taken with immediate effects but then the government took a decision to restrict import of laptops and has now been suspended till 1st November, 2023. 

About the Placed Restrictions:

• Notification By: The notification in this regard was issued by the Directorate General of Foreign Trade (DGFT).
  • DGFT is an agency of the Ministry of Commerce and Industry, responsible for administering laws regarding foreign trade.
• Aim: 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.
• Need Permission for Imports: Any entity planning to import laptops and computers for sale in India will now have to seek permission or license from the government for their inbound shipments.
• Imposition of Restrictions: The restrictions have been imposed under HSN Code 8471 on seven categories of electronic gadgets.
  • The Harmonized System of Nomenclature (HSN) code is a classification system used to identify products for taxation purposes.
  • HSN Code 8471 is used to identify devices that are designed to perform data processing tasks.

Implications of the Decision Taken:

• Increase of Local Share: Shortly after the announcement, shares of local electronics contract manufacturers have increased.
• Price Hike: Big Corporations like Apple, Lenovo, HP, etc. will have to either start manufacturing their laptops in India or stop importing their gadgets to India.
  • This will likely lead to an increase in the price of current products in the Indian market.
  • The restriction is likely to impact the sales and discounts that retailers and companies offer from time to time.
  • If the demand goes up, the retailers will have no incentive to offer any discounts on these products.
• A Negative Signal to Partnering Countries: The decision seems adverse to the partners, especially to its trading partners. 
  • And most probably these countries would also take the same curbing decision for India too.
• Effect on Indian Economy: Any move to curb market freedoms, however well-intentioned and opportunistic in a changing global order, could undermine hard-won gains.
  • The size of its domestic market with the ease of restrictions and positive steps taken are favorable for global manufacturers trying to make their supply chains more resilient and has allayed Western concerns over the transfer of dual-use technology. 
  • But the curbing steps are going to impact adversely on these significant achievements.

Conclusion:

• The curbing is a kind of wrong signal for the global investors to receive about the time they are sizing up the India opportunity and also the national security argument is overdone, and there are better ways to increase domestic manufacturing.
• India cannot afford misgivings among sources of capital and technology as it tries to speed up to become the world’s third-largest economy.
  • The government needs to bring out a mid-way or modified foreign policy to address its challenges while maintaining its pace of growth and good relations with partner countries.

News Source: The Economic Times