| Introduction: Brief context of the government decision. Body: Impact of this decision and how will it impact the tech industry. Conclusion: Way forward. |
Recently, the Union Government issued an order requiring licenses to import personal computers, laptops, palmtops, automatic data processing machines, microcomputers/processors, and large/mainframe computers with immediate effect. The industry has raised concern regarding the move as it could lead to the old days of license raj and bureaucratic discretion.
What is the impact of this decision and how will it impact the tech industry?
- Curb imports 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.
- Supply chain effect: The decision might lead to unnecessary disruption in the immediate term, create supply shortages, and drive up prices of electronic equipment.
- Boost to domestic manufacturing: It is believed that this action will directly benefit the Centre’s recently production-linked incentive (PLI) program for IT hardware. The move is aimed at pushing companies to manufacture locally in India, & strengthen the domestic IT infrastructure.
- Security: Recently there have been concerns regarding the electronic hardware imported from China as they were found to have security loopholes that may potentially endanger sensitive personal and enterprise data. Addressing the concern of cybersecurity is also one of the intended objectives of the government.
- 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.
Conclusion:
While the government has defended the move to boost domestic production, it should not lead to old socialist days of license and permit raj, and bureaucratic red-tapism which were regressive policies impacting India’s growth negatively.
