That ’70s show – Proposed licensing for computing devices’ imports dents India’s credibility

Source: The post is based on the article “That ’70s show – Proposed licensing for computing devices’ imports dents India’s credibility” published in The Hindu on 10^th August 2023.

Syllabus: GS 3 – Indian Economy – Growth & Development

Relevance: concerns with import restrictions

News: The Commerce and Industry Ministry of India implemented abrupt restrictions on imports of laptops, PCs, tablets, and servers, necessitating importers to acquire licenses.

This action prompted worries about supply chain disruptions, possible scarcities, and increasing prices.

Why did the government impose restrictions?

The government cited security reasons for the decision as imported devices could be utilized for surveillance, similar to the potential for spyware in mobile phones.

This move will also encourage IT hardware manufacturers to establish production facilities in India through a production-linked incentive scheme.

However, due to the complex nature of PC component value chains, these plans faced criticism and raised fears of impacting India’s software and IT-enabled services exports.

Hence, the government postponed the restrictions until November 1, assuring quicker license approvals.

What are the concerns with imposing restrictions?

While the government claims quick license issuance, this situation brings back memories of India’s earlier IT industry stages (1970s and 1980s), causing unease among industry players until the licensing rules clarify.

If concerns about security are arising due to PC and tablet imports from China, the government could enforce testing requirements to ensure the safety of shipments.

Whereas, if the goal is to encourage investments, it becomes challenging to force major global players into making substantial investments when they have more convenient business options elsewhere.

Therefore, such restrictions might increase costs and limit device choices, impacting Indian consumers and hindering digital access to government services.

Must Read: Express View on restrictions on laptop imports: Licence raj dot com

What lies ahead?

This situation, along with recent policies like the 28% GST on gaming bets and the freeze on prices of ‘deregulated’ petroleum products, is worrying for investors.

Hence, India’s reform narrative might be derailed by unpredictable policies, exorbitant taxes, and a return to maximum government.