Explained: What Government's Ban On Import Of Laptops, Computers Means For Customers

The central government on Thursday imposed restrictions on import of laptops, tablets, all-in-one personal computers and ultra-small computers and servers with immediate effect. Any entity or company planning to bring laptops and computers for sale in India will now have to seek permission or license from the government for their inbound shipments. The notification in this regard was issued by the Directorate General of Foreign Trade (DGFT). The restrictions have been imposed under HSN Code 8471 on seven categories of electronic gadgets.

What does the HSN Code 8471 say?

The Harmonised System of Nomenclature (HSN) code is a classification system used to identify products for taxation purposes. Data processing machines are classified under HSN code 8471. This code is used to identify devices that are designed to perform data processing tasks.

Why have these restrictions been imposed?

The move has been announced with an aim to promote domestic manufacturing of these products under the recently renewed production-linked incentive (PLI) scheme for IT hardware. The last date to apply for the so-called production-linked incentives in this product category is August 30. According to news agency PTI, it also curtail inbound shipments of these goods from countries like China and Korea.

However, it quoted a government official as saying that there are a variety of reasons for imposing these restrictions but the primary is "to ensure that the security of our citizens is fully safeguarded".

"Some of the hardware could potentially have security related issues and could compromise sensitive and personal data, we have taken into account few of those goods," the official told the news agency.

Are there any exemptions?

Yes. Under the transition provisions of the foreign trade policy (FTP), if the bill of lading and letter of credit has been issued or opened before August 3, the import consignments can be imported.

An importer can apply for a license from August 4. The trader should have to be a regular importer to get a license.

Exemptions have also been given 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. However, these imports shall be subject to payment of duty as applicable.

PTI said there is an exemption from seeking import licensing for up to 20 items per consignment for R&D, testing, benchmarking and evaluation, repair and return, and product development purposes.

These curbs are also not applicable to imports under baggage rules.

The potential impact of the move

Shortly after the announcement, shares of local electronics contract manufacturers rose. Amber Enterprises India Ltd. gained as much as 3.3%, Dixon Technologies India Ltd. rose 5.5% and PG Electroplast Ltd. spiked 2.8%, reported Bloomberg. Netweb, a domestic server manufacturing company, also saw its shares going up 4% along with Dixon Technologies (approximately 8%).

Further, the government's announcement is expected to impact companies that import bulk of their products from outside India. Tech giants like Apple will have to either start manufacturing their laptops in India or stop importing their gadgets to India.

The same rule will also apply to other PC manufacturers like Lenovo, HP, Asus, Acer, Samsung. This will likely lead to an increase in the price of current laptops, computers, MacBooks, and Mac Minis in the Indian market.

However, the implication of the import restriction on laptops will be clear in the coming days. For now, Apple and other companies have not changed the prices of their existing laptops that are already there in the Indian market, but the import restriction is likely to impact the sales and discounts that retailers and companies offer from time to time. If the demand will go up, the retailers will have no incentive to offer any discounts on the laptops.

Most of the laptops and personal computers sold in India are manufactured or assembled in China. With the new rule, the government plans to shift all this to India. If that happens, the prices of these gadgets can go down.

The companies, meanwhile, can apply for and obtain special permits to bring laptops into India.