| Introduction: Give the context of the recent order. Body: How it will impact the IT industry? Conclusion: Way forward |
Union Government order requiring licenses to import personal computers, laptops, palmtops, automatic data processing machines, microcomputers/processors, and large/mainframe computers with immediate effect has raised concern among the IT industry as it could lead to the old days of license raj and bureaucratic discretion & marks a regression in the country’s outlook on trade liberalization.
How might these restrictions affect the country’s technological advancement and economic growth?
- Less import from China: The government has defended the move as it will curb the majority share of imports of these items from China. In 2022-23, imports of personal computers, laptops, etc. stood at $5.3 billion, with China accounting for an overwhelming share of these.
- Disruption in supplies: The government decision might lead to supply chain disruption in the domestic market, creating supply shortages and raising the prices of these items in the retail market. Licensing development could lead to price increases for certain products ahead of the Diwali festive season in India in early November.
- National Security: Electronic devices imported from China have recently raised concerns due to security flaws that might potentially put sensitive personal and business data at risk. One of the government’s stated goals is to address the issue of cybersecurity.
- Atmanirbhar Bharat: The stated aim of the government behind the move is to boost domestic manufacturing. This measure is anticipated to have a direct positive impact on the Centre’s recently launched production-linked incentive (PLI) program for IT hardware. The action aims to encourage businesses to produce locally in India and to support the nation’s IT infrastructure.
- Effect on big tech companies: The move may considerably hit revenues of companies like Apple, Dell and Samsung, HP which consider India a very lucrative market for their manufactured goods.
- Domestic market: The restriction will likely impact the domestic market of retailers and companies engaged in the business of electronic items. It will impact the income of retailers as the high demand for these items will impact the sales and discounts of the retailers and companies.
- IT industry: The industry has raised concern regarding the notification and asked for clarification as India’s service sector critically depends on the import of these items.
- IT Hardware: The PLI Scheme 2.0 for IT Hardware is expected to result in the broadening and deepening of the manufacturing ecosystem by encouraging the localization of components and sub-assemblies and allowing for a longer duration to develop the supply chain within the country. The scheme is expected to lead to a total production of about ₹ 3.35 lakh crore, bring an additional investment of ₹ 2,430 crores in electronics manufacturing, and will lead to the generation of 75,000 additional direct jobs. This will result in lowering IT Hardware prices.
Conclusion:
While the intention of the government is novel in approach, it is prudent to consult all stakeholders involved regarding the policy so as not to derail the progress of India’s IT revolution.
