Will you get more time to buy an imported laptop?

The Union government is studying whether to extend the deadline for restricting imports of laptops, desktops and tablet computers, given that local production of some of these items has picked up, but hardly enough to substitute imports.

A year ago, India abruptly banned imports of select IT hardware products, but the order was overturned after demands from industry representatives, the US Trade Representative and global manufacturers such as Dell, HP, Lenovo. In October, the government proposed to introduce a system to licence such imports within a year.

“We’re analysing data of imports, of local production. There’s still time, we will take a call based on the findings," said a senior official, asking not to be named.

According to data from Counterpoint Research, 11.8 million laptops were sold in India in 2023, of which local production was only 30-35%. It expects the market to have grown to about 13 million, with local production crossing 40% levels.

After India introduced a production-linked incentives (PLI) scheme for laptops, tablets and other IT hardware, some global companies began expanding their existing local production footprint, but most of them will begin production only next year, industry executives said.

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“The government is aware that investments have been committed and that manufacturing will take place; so, while they’re reviewing the data and the timeline, they have also assured that the industry is moving in the right direction and production will pick up," an executive at one of the laptop makers involved in consultations with the government said on the condition of anonymity.

Analysis of data on cards

S. Krishnan, secretary at the ministry of electronics and information technology, told Mint in an interview last month that the government would begin analysing import data of laptops, servers and other IT hardware products on a quarterly basis, before deciding on implementing the import management system. The government will focus on so-called trusted sources while it takes a final decision in this matter, Krishnan had said, referring to the countries that export goods to India.

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The government has been working to raise local manufacturing of consumer gadgets, viewing many items made in China as a national security concern. India imported about $3.8 billion worth of laptops and PCs from China in FY24, making up 77.7% of India’s imports in this sector, as per data from Global Trade Research Initiative (GTRI) issued last week.

“Asus, HP, Dell have all started local manufacturing. Lenovo and Acer too are doing it now. But whether it is at a pace to substitute imports, definitely no. Vendors aren't scaling up fast enough as yet and local assembly is still 6-8% more expensive compared to imports. May be the government again puts pressure in October as renewal timeline of important agreements comes up," said Navkendar Singh, associate vice president with IDC India, a technology researcher.

Falling import volume

Laptop imports fell 5-8% by volume in last few quarters, Singh added, largely because Lenovo and Acer increased local assembly for entry-level laptops targeting SMEs, government and public education. “Other vendors are still importing big volumes. They assemble locally order-to-order basis as of now, per requirement as per tender," Singh added.

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“With the push from Indian government on increasing local manufacturing, laptop-PC original equipment manufacturers (OEMs) are increasing their local manufacturing operations in India, either with expansion of in-house facilities or deepening partnerships with contract manufacturers," said Prachir Singh, a research analyst at Counterpoint Research.

According to Counterpoint data, imports of completely built laptops during the first five months of 2024 fell by 4% compared to the same period in 2023. Laptop imports rose 42% in July-December 2023, compared to the six-month period before that, while a 29% decline was seen in the January-May period of 2024, compared to the six-month period before that.

Local in telecom

The government has already ensured that products used in telecom infrastructure should be made locally, and imports allowed only from ‘trusted sources’. In this context, supplies from Chinese vendors have been blocked. The government feels that local production of IT hardware should take off on the back of successful mobile phone manufacturing, where now 96% of the 146-million-plus smartphones used every year in India are made in the country. The PLI scheme for mobile phones has seen investments of ₹8,282 crore till June 2024, with all major brands including Apple, Google, Xiaomi, Oppo, Vivo and others making their devices in India.

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The government introduced the first PLI scheme for IT hardware products, which did not take off, but the PLI 2.0 that was introduced in May 2023 has managed to attract ₹464.66 crore in investments by 27 companies, as per data from ministry of electronics and IT in July this year.