India promotes local production by imposing restrictions on laptop imports

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India has implemented sudden restrictions on the import of personal computers, including laptops and tablets, in an effort to promote local electronics manufacturing. According to a notice issued by the commerce ministry’s directorate general of foreign trade, companies will now require a “restricted imports” license to ship these devices into India. This new rule is expected to create a barrier that will slow down imports. The directorate did not provide a reason for the policy shift or disclose the anticipated impact. However, this move aligns with India’s focus on developing its electronics industry and reducing reliance on China for manufacturing.

“Today’s policy announcement aims to accelerate the ‘Make in India’ initiative,” said Prabhu Ram, head of industry intelligence at CyberMedia Research, an Indian consulting firm, referring to Prime Minister Narendra Modi’s flagship policy on domestic manufacturing. In May, the Indian government launched a Rs170bn ($2.1bn) incentive scheme for IT hardware manufacturing to encourage companies to establish factories in India. While this is a welcome opportunity for companies manufacturing in India, the new import restrictions pose challenges for those who do not.

The announcement of these import restrictions has fueled a surge in the shares of local electronics companies. Dixon Technologies, which recently partnered with Taiwanese hardware maker Acer to manufacture laptops in India, experienced an 8% increase in its stock value. However, companies like Apple, which holds a 14% share of India’s laptop market, could be negatively affected by the new import regulations. Apple currently assembles iPhones in India to reduce reliance on China, but imports all its laptops and iPad tablets. Notably, India imported $1.5bn worth of personal computers between January and May this year, a decrease from $2.7bn during the same period last year, according to official trade statistics.

Indian companies are gradually venturing into laptop manufacturing. Reliance Jio, the digital unit of billionaire tycoon Mukesh Ambani, recently launched a new laptop model priced at Rs16,499. Jio had introduced its first laptop late last year. Primebook, a startup based in New Delhi, is also producing a laptop targeted at students.

While many multinational computer companies already manufacture laptops in India, some, like Asus and Samsung, produce all their laptops in other Asian countries such as China and Vietnam.

Analysts warn that India’s import restrictions could disrupt the computer market, particularly during the upcoming religious festivals, which are typically busy sales periods. “Laptops currently in inventory may experience price hikes due to product scarcity,” said Ashweej Aithal, an analyst at Canalys. “Apple and Asus might face difficulties obtaining a PC import license, unlike companies already manufacturing locally.”