IT hardware: New ‘operating system’ in works to ramp up local IT hardware play

The government is likely to offer some concessions in import quotas to electronic hardware manufacturing companies that can step up domestic production under the production-linked incentive (PLI) scheme for information technology (IT) hardware, said people with knowledge of the matter.

In a meeting with stakeholders last week, government officials asked all companies to provide concrete production plans for the next fiscal year for products such as laptops, tablets, all-in-one personal computers, ultra-small form factor computers, and servers.

“The idea is that companies must increase the domestic value addition for their products,” an official said. “All (companies) have been given enough time and we must look for ways in which it (domestic value addition) can be improved without any major business disruptions.”

The proposal to offer additional import quotas against improvement in PLI production is one of the options being discussed by the government, the official said.“Since PLI and domestic manufacturing have not picked up, some steps have to be taken up to spur production. Discussions are going on with stakeholders on the way forward,” another official said.

The government first imposed import restrictions on laptops, tablets, all-in-one personal computers, ultra-small form factor computers and servers on August 3, 2023.

Last month, the government extended the timeline for the import management system (IMS) for certain IT hardware products such as personal computers, laptops and tablets by three months until December 31.

In FY24, imports of these products stood at $8.4 billion against the authorisation of around $9.5 billion. As per officials, the import monitoring system showed most of the goods came from China with the rest from Hong Kong, Southeast Asia and the US.

“The idea to extend the import management system was business continuity, so that companies can continue to import as they are doing now,” said an official.

While the old system is in place, the government is formulating new guidelines for the import of these products and is hopeful of releasing them for public consultation soon.

It will then implement the new import management system, said one of the officials cited above.

“Our understanding is that the new guidelines will take some time. First, the ministry of electronics and information technology will decide on the new mechanism in consultation with other stakeholders including the commerce ministry and the finance ministry,” an official said, adding that extending the import restriction deadline for 90 days beyond December 31 is also an option.

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