In an unexpected turn of events, the influx of laptops and personal computers (PCs) into India has been predominantly marked by a staggering increase in imports from China. As of January, an overwhelming 90 percent of these imported devices were of Chinese origin. This surge in imports came despite India’s efforts to limit dependency on Chinese technology and bolster indigenous production.
In the months preceding January, the dominance of Chinese imports was already evident, with the figures for November and December standing at 83 percent and 89 percent respectively. This trend starkly contrasts with the Indian government’s goal to revive local manufacturing, highlighted by the Directorate General of Foreign Trade (DGFT)’s August 2023 notification which initially categorized the import of laptops and PCs as restricted. However, the policy saw a hasty retreat, contributing to a rebound in imports from China.
Although the government rolled out an improved IT hardware manufacturing incentive policy to spark domestic production, the aggregate laptop imports painted a different picture, rising by 5 percent year-on-year in FY24 up until January. In particular, imports from China saw a 6 percent increase, amounting to nearly 64.93 lakh units in comparison to the 61.24 lakh units in the previous fiscal year.
The data provided by the Commerce Ministry underlines a panicky industry response to the DGFT licensing restriction, leading to stockpiling prior to the policy’s postponement to October 31. After the complete revocation of the import license plan, there was a decline in total imports due to high stocks, yet China’s chunk of the market grew substantially.
The evolution of China’s share in India’s imports is quite telling. Prior to the DGFT notification (from April to July 2023), China held approximately 76 percent of the market. During the phase of uncertainty, this figure dipped to around 70 percent. However, post the withdrawal of the license plan (from November 2023 to January 2024), it shot up dramatically to 87.5 percent.
These occurrences unfolded against the backdrop of the United States’ vocal efforts to deter India from imposing stringent laptop import restrictions to protect major American corporations like Apple, Dell, and HP. The implications of the restriction notification and its swift postponement saw a redistribution in trade flows; imports from Singapore increased noticeably as companies re-routed some of their businesses through this international trading hub amid the uncertainty.
September witnessed a significant spike in laptop imports to India, and China’s share remained dominant, capturing more than 11 lakh units of the roughly 15 lakh units imported. The festive season of Diwali, typically a time of increased consumer electronics purchases, also likely contributed to this heightened activity. Despite the government abandoning the licensure requirement in favor of an import management system in late October, inventories had already been topped up by companies in anticipation of changes.
China’s dominance was reinforced in the subsequent months, with its share escalating further in December and January, reaching a piercing 89 percent and 90 percent, respectively. Interestingly, the pattern of decline in imports during November to January of FY24 echoes the trend from FY23, although the volumes in the festive months were distinctly higher in FY24, indicating a rush due to the transient import barriers.
The government’s production-linked incentive (PLI) scheme for IT hardware, aimed at invigorating local manufacturing, has been underwhelming in its progress. Despite the eligibility of multiple entities for the scheme, the industry’s response with detailed production projections remains lukewarm.
Amid this backdrop, India still permits companies to import unlimited quantities of laptops and computers until September 2024, without constraints, which inadvertently dissuades them from prioritizing the IT hardware PLI scheme. Despite government attempts and international developments, India’s dependency on Chinese technology remains a challenge punctuated by the intricacies of global trade dynamics and policies.
