India recently extended the import authorisation system for laptops, PCs, tablets, and servers from the original deadline of September 30 to December 31
In August 2023, the government initially mandated import licenses for these items but later eased the rules, allowing importers to obtain authorisation instead.
This is the verbatim transcript of the interview.
Q: Was there a problem for any of the laptop computer users in the past year, or was it a smooth availability?
Aggarwal: It has been a year now since this import authorization requirement had come in and from an IT user industry just to purchasing this for their use, what we have seen is that over the last year, things are pretty much settled down. There was initially an uncertainty about how this process might work out and it might result in some problems for us, but for the user industry, particularly, I think we have had some discussions with them, and the process is pretty much smooth, and we haven’t seen any serious problem, as long as it is just about some procedure for registration and it doesn’t apply for them directly, because a lot of them procure through other people who are the importers.
Q: Many of them are also in Software Technology Parks of India (StPi) and Special Economic Zones (SEZs), right? The IT companies. So they were, anyway, excluded?
Aggarwal: So the bulk of our industry is in SEZ and StPi. So there are two kinds of exemptions which are there – one is for the import into these SEZ and StPi, and also if you are taking to the domestic tariff area from these SEZs, then that is also not considered as an import for this authorization.
The second area is also, there is a lot of work which happens in our industry, which is related to research and development (R&D) and testing, and all of that where the quantities are small, but it’s important. So, that is exempted. So all of these exemptions have been very useful.
Q: Kumar Deep, you represent the Dells and the Apples. How smooth was the import process and were the numbers volumes lower because of this hurdle that you all had to cross?
Deep: First of all, let me begin by thanking the government for extending the current import management system by three months. However, what we have been maintaining is that the industry needs more clarity on any new import authorisation policy, whether you call it a license, whether you call it a authorisation policy. And now what we understand is that it is set to take place from January 2025.
Coming back to your question about how difficult it was, let me reemphasise the fact that many of our member companies are now production link incentive scheme (PLI) signatories, which means that they are manufacturing in India. However, one must understand that, due to the lack of a proper electronic component ecosystem in India, it is almost impossible to manufacture everything in India currently, and there needs to be sufficient timelines so that manufacturers can shift production.
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We also want to emphasise another point, and I specifically take the example of the US, where the US government recognizes that companies will continue to source some products from maybe any other geography, perhaps China, and because the US does not produce sufficient quantities of all these products, as acknowledged in National Telecommunications and Information Administration’s (NTIA) limited waiver of Build America, Buy America waiver requirements for Broadband Equity Access Deployment program, or BEAD as it is known as. So those are some of the challenges. You understand that last year we faced a whole lot of lack of clarity as to what is going to happen, and that is the same situation we are in right now.
Q: so your members of the ITI Council are not opposed to it in principle, but they only want clarity and a timeline. Am I right?
Deep: We are opposed to any kind of quota system in principle because none of this can happen because it will disallow a lack of innovative products to the Indian consumers. That is one part of the story. But we also want to work with the government, since many of our members are now PLI manufacturers as well, we want to work with the government. We want sufficient stakeholder consultation before a new system is put in place, and give us some transition timelines. That is all we are asking.
Q: Have you all been good beneficiaries of what looks like a nudge to exactly do what Kumar Deep is saying, nudge the foreign manufacturers to do PLI or tie up with Indian companies, has that happened?
Sampath: Fundamentally, the idea is to generate the capacity and capability within India, which is very strategic. We can keep importing till we lose all our money. So fundamentally, that has helped us.
We are into high-performance computing, servers and complex products. So contrary to what is the perception, we can do those things better than high-volume products, because the Indian ecosystem does have the capability. And we are now capitalizing the companies, some people have gone to markets to raise funds and so on. So we have the latest generation of machines. So this low volume and all these highly complex products can be very well done in India.
And for doing high-volume products, we do require to put some more capital, and these companies have to put in more capacities to get it done. The PLI scheme has been very nicely configured. You can never have a perfect solution. So we could always say the glass is half full or half empty. I would look at the half-empty portion as an opportunity for our company. So I think all of us, all the stakeholders, must look at how to strengthen the Indian manufacturing ecosystem, which will help users and also help global original equipment manufacturers (OEMs). There’s no difference between us and the world.
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