Impact of restricting imports on Laptops, Tablets, PCs, Servers, etc

[Vivek Jalan]

Friends,

Vide Notification No. 23/2023 dated 3rd August 2023 issued by the DGFT, with immediate effect, import of laptops, tablets, palmtops, all-in-one personal computers, and ultra small form factor computers and servers falling under HSN 8471 will be ‘restricted’ and their import would be allowed only against a valid licence for restricted imports. The said notification has been said to have been issued for ‘security reasons’ to comply with WTO norms. However, it seems that the same has been done to push for make in India, to promote domestic manufacturing of these products, curtail the majority share of imports of these items from China and encourage the OEMs to apply for PIL scheme. Dell, Acer, Samsung, LG Electronics, Apple Inc, Lenovo, HP Inc, may be impacted severely by this notification.

The short-term impact of this notification would be manifold. First and foremost, there is expected to be a scarcity of these products and there is expected to be a short-term rise in prices of laptops, tablets, palmtops, all-in-one personal computers, and ultra small form factor computers, servers, etc. This is because majority of these products are now imported by these OEMs also from China, Vietnam, etc.

It is important to note that the restriction is on import from ‘all’ countries and only some exemptions have been provided like import of one laptop, tablet, all-in-one personal computer or ultra small form factor computer, including those purchased from e-commerce portals through post or courier. Also exempted are laptops, tablets, all-in-one personal computers, and ultra small form factor computers if they are essential part of capital goods. Again, it is not these products as capital goods itself which have been exempted but when they are a ‘part’ of capital goods that they are exempted. For E.g. When server is a ‘part’ of a setup of a whole floor of a software company that it will be exempt from the impact of this notification. For the purpose of R&D, testing, benchmarking and evaluation repair and re-export, and product development purposes, the exemption from import licence for imports up to 20 items per consignment has also been provided. Again, licence for restricted imports shall not be required for the repair and return of re-import of goods repaired abroad, as per the Foreign Trade Policy.

Secondly, the procedure for applying for the license and the modus operandi of granting the license is not yet clarified. Hence neither the application can be made at this point nor can the DGFT/Customs department grant the license until further procedure is set.

Third, it seems that all consignments for which Bill of lading has been made and/or Letter of Credit has been made before 3rd August would be exempt from this notification. However, most imports are for group companies where no LCs are made. For example, in case say Dell India imports from Dell China, the material would be on the port on 3rd August but Bill of Lading would be made on 5th August. In such case the material would have to go back to the warehouse/factory as the consignment would fall under restriction in India.

Fourth, in case the imports are by air, then the same issue would arise.

This notification comes as a bolt from the blue for this sector and can have serious ramifications for not only this trade but even consumers. Hence the Ministry of Commerce should review the same as soon as possible.