Curbs on laptop, PC imports to check IT hardware with in-built security loopholes

The government has imposed a licensing requirement for the import of laptops, tablets and personal computers to guard against IT hardware coming in with in-built security loopholes that may potentially endanger sensitive personal and enterprise data.

Restrictions were placed on the import of laptops, tablets and servers by the Indian government on Thursday. (Reuters)

The government has imposed a licensing requirement for the import of laptops, tablets and personal computers to guard against IT hardware coming in with in-built security loopholes that may potentially endanger sensitive personal and enterprise data, top sources said.

With India having sufficient capacity for IT hardware devices manufacturing, the requirement of purchasers needing permission to import laptops, tablets, all-in-one personal computers, and ultra-small computers and servers will not in any way hit domestic availability, sources aware of the thinking behind the government move said.

Sources said the government is committed to ensuring that the Internet in India is 'open, safe and trusted and accountable' for all users. With the expansion of the Internet and more and more Indians coming online, the possibility of citizens being exposed to user harm and criminality has also increased. Various incidents of cybersecurity threats have also been reported.

The inbuilt security loopholes like hardware backdoors and firmware malware in IT hardware may be potentially endangering sensitive personal and enterprise data, they said, adding providing secure hardware is the foundation for security.

The government has introduced this policy condition in order to protect the security interest of the country and its citizens, they said.

Electronics and Information Technology

Minister of State for Electronics and Information Technology Rajeev Chandrasekhar in a tweet said the objective behind the move was to "ensure trusted hardware and systems, reduce import dependence and increase domestic mfg of this category of products".

"This is not at all abt license raj - It is about regulating imports to ensure trusted and verifiable systems AND ensuring India tech eco-system uses trusted and verified systems only that are imported and/or domestically manufactured trusted systems/products," he added.

According to sources, the non-tariff barrier is not a ban on imports. Companies/traders can import IT hardware devices after obtaining a valid license from DGFT.

DGFT has prepared a portal, and companies/traders can apply online for getting a license. It is expected that DGFT will issue a license within 3/4 days if details are filled in properly.

Goods/consignments in transit will be allowed without an import license.

The import curbs imposed on laptops and computers would help bridge India's trade deficit with China and promote domestic manufacturing, a senior government official said on Friday.

The official said that the move would also help electronic companies to start manufacturing these devices in India rather than only assembling them.

"The intent behind this is to promote Make in India and to attract investments within the country so that more and more companies can come to India and produce here. We want the iPhone model to be replicated in the laptop and PC (personal computer) segment," the commerce and industry ministry official said.

When asked if the decision would increase prices in the local markets, the official said there is an access capacity in India because of the imports, particularly from China, so there would not be any price rise.

"Imports are impacting their business plans, so the move will help them to produce," the official said, adding imports of most of these items are coming from China, and there is a trade imbalance with that country.

"So we want to address that trade imbalance. Let the production take place rather than imports," the official said.

Prior to the Directorate General of Foreign Trade notification of August 3, regulations allowed companies to import laptops freely.

The notification, however, gives exceptions to certain categories, including the import of one laptop, tablet, all-in-one personal computer, or ultra-small form factor computer coming as part of baggage allowance.

Also, imports of 20 IT devices per consignment for R&D, testing, benchmarking and evaluation as well as imports for repair and re-export, and for product development purposes are also exempt. Re-import of goods repaired abroad, and devices coming as essential parts of capital goods are also exempt.

Sources said India has sufficient capacity for IT hardware devices and to further boost domestic manufacturing and create an economy of scale for IT hardware, the government has notified production linked incentive scheme 2.0 in May this year, which will ultimately result in further lowering of the prices for IT hardware products.

In PLI 2.0 IT Hardware Scheme, 44 companies have already been registered as of July 31. Companies can submit applications till 30th August 2023.

After this Non-Tariff Barrier, IT Hardware OEMs or EMS players will recalculate their yearly production targets understanding that imports will almost stop (by around 93 per cent) in four years' time.

As per information, except for Apple, all other big IT hardware companies, like Dell, HP, HPE, Lenovo, ASUS, ACER, Intel, and local brands are participating directly or through EMS players in PLI 2.0 for IT Hardware scheme, sources said.

The government has been promoting local manufacturing and discouraging imports under the 'Make in India' plan.

India's electronics imports, which include laptops, tablets and personal computers, stood at USD 19.7 billion in the April to June period, up 6.25 per cent year-on-year.

In 2022-23, personal computer, including laptop, imports stood at USD 5.33 billion in 2022-23.

The basic customs duties on laptop, PC and similar products in India is zero. India cannot increase this duty as it has committed to zero duty on computers and many IT-related products by signing an Information Technology Agreement (ITA) in 1997.