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No Import restriction on desktop computers: Director General of Foreign Trade clarifies

DGFT has now clarified that any other goods (including desktop computers), apart from devices already mentioned in the August 2023 notification, under code HSN 8741 will not be included under the scope of the import restriction.

In a circular published on January 12, the Director General of Foreign Trade (DGFT) clarified that desktop computers would not be included under the scope of import restrictions that were introduced in August 2023.  In August last year, the Ministry of Commerce notified that the import of laptops, tablets, all-in-one personal computers, and ultra-small form factor computers and servers under code HSN 8741 [HSN is a classification of goods and determining their customs tariffs all over the world] will be restricted starting November 1, 2023. DGFT has now clarified that any other goods (including desktop computers) under code HSN 8741 will not be included under the scope of the import restriction. It further mentioned that the restricted items would be allowed entry into the Indian market against a valid import authorization.

For context, a desktop computer houses all its components within its case, or tower, including an independent central processing unit (CPU), graphics processing unit (GPU), random access memory (RAM), motherboard, fans/cooling, disc drive(s) or solid state drive(s), and power supply unit (PSU). By contrast, all-in-one personal computers combine all these different parts into one single piece of hardware.

Impact of import restrictions:

In November 2023, the government announced that 27 companies, including Acer, Asus, Dell, HP, and Lenovo had been approved as beneficiaries under its product-linked incentive scheme (PLI 2.0) which provided companies with financial incentives for producing devices in India. This scheme notably covered laptops, tablets, all-in-one PCs, Servers, and Ultra Small Form Factor devices, all the devices that had been put under import restriction. Before the restriction was announced, the PLI scheme was not garnering much interest from tech companies. But soon after, 38 companies sent in applications to manufacture IT hardware in India.

US response to import restriction:

The issue of import restriction came up during a recent meeting between the Minister of Commerce and Industry, India, Shri Piyush Goyal, and U.S. Trade Representative, Ambassador Katherine Tai. Goyal explained India’s objectives, including those related to national security concerns with respect to the import curb and Tai expressed a willingness to work with India on the shared objective of supply chain resilience in the IT sector. Interestingly, when the import curb was first announced many pointed out that it was an attempt to reduce India’s dependence on China. According to a report by the Times of India, China produces 90% of the world’s laptops. US’s willingness to work on supply chain resilience signals that it might also want to reduce dependence on Chinese IT manufacturers.

In October 2023, in a World Trade Organization (WTO) meeting the US, China, and Korea had raised concerns about the import curb. At the time, the US had said that this restriction would have an impact on the trade of the IT products notified by the Indian government. However, the US seems to have changed its stance now, at the recent meeting  Tai welcomed the fact that India has implemented the import restriction in a “facilitative manner that has thus far minimized the impact on trade”. She urged India to ensure that the end-to-end online system currently in operation and related policies do not restrict trade going forward.

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