The Indian government has made yet another attempt to give its flagship Make in India initiative a push.
On August 3, India said companies importing laptops, tablets, and PCs into the country would need to get a license. A day after the announcement, Bloomberg reported that Apple, Samsung, and HP were freezing new imports of laptops and tablets into India. A few days later, another official announcement allowed companies to import laptops, PCs, and other electronics goods without a license until October 31.
The Indian government did not disclose the reasoning behind its new license regime, but experts believe it is aimed at increasing local manufacturing.
“[The new rule] comes as no surprise, given the government’s persistent efforts to boost local electronic manufacturing,” market research firm Counterpoint said in a statement. India has made “remarkable progress” in terms of manufacturing smartphones and TVs, Counterpoint said, but only 30%–35% of IT hardware products currently sold in the country are locally made. “This move signals a strong push to bridge that gap.”
Make in India — an initiative to boost electronics manufacturing in the country — has been a cornerstone of Prime Minister Narendra Modi’s government for nearly a decade now. To make the program a success, India has been trying to woo a host of global manufacturers — from Foxconn to Tesla — to set up local factories. Recently, the Make in India initiative faced a speed bump when Taiwanese electronics manufacturer Foxconn withdrew from an agreement to set up a display and semiconductor manufacturing facility in Modi’s home state of Gujarat.
Experts have called the new license-to-import rule “protectionism,” and remain skeptical about how much it could help India establish itself as the global manufacturing destination it aspires to become.
“Protectionism, at best, leads to mediocre local production,” Pranay Kotasthane, who chairs the high-tech geopolitics program at independent research nonprofit Takshashila Institution, told my colleague Nilesh Christopher. “With no international competition, local companies might be able to increase their domestic share, but have no incentive to improve or compete in the international market. Moreover, given the current levels of manufacturing capabilities, companies will merely assemble laptops in India after importing sub-components from abroad.”
Whether manufacturing gets a boost or not, one thing is for sure: In the coming months, laptops, tablets, and PCs are likely to get more expensive, and customers may need to wait longer for deliveries.
According to Reuters, the new license-to-import rule is likely to hit companies like Dell, Samsung, and Apple “hard.”
“This restriction may lead to some short-term supply disruptions, especially for brands like Apple, HP, and Lenovo,” Counterpoint said. “With the festive season approaching, a significant period for sales, the industry may face challenges in meeting demand.”
The move could also end up hurting India’s IT industry, according to Kotasthane. “Cheap laptops are an essential input for Indian service sector businesses, including the IT sector, which is a major export earner,” he said. “A licensing regime will hurt this sector’s profitability directly.”
