On 3rd August 2023, the Directorate General of Foreign Trade (“DGFT”) under the Ministry of Commerce and Industry issued a notification (“Notification 23/2023”) amending the Import Policy, restricting the import of laptops, tablets, All-in-one personal computers, and ultra-small form factor computers and servers falling under HSN 8471 of Chapter 84 of Schedule-I of the Import Policy. While the amendment was to come into effect immediately, the DGFT issued another notification extending the effective date of the amendment to 1st November 2023, giving companies a transition period to apply for a license.
As per Notification 23/2023 import of laptops, tablets, All-in-one Computers and ultra-small form factor computers and servers will only be allowed upon obtaining a valid license for the same since the said products have now been categorized as ‘Restricted’ under the import policy.
However, following exemptions from the licensing requirement have been provided for the import of these products:
- The restriction will not apply to imports under Baggage Rules, 2016 (notified under the Customs Act, 1962). These rules govern importation of baggage by travellers/tourists/residents at the time of travelling to India. In light of the exemption under Notification 23/2023, persons travelling from foreign countries to India can bring in such item with them in their baggage subject to the requirements mentioned under the Baggage Rules.
- Further, the import of 1 laptop, tablet, all-in-one personal computer, or ultra-small form factor computer, including those purchased from e-commerce platforms, through post or courier will be exempt from licensing requirements, although duty will be applicable on them.
- Furthermore, up to 20 items per consignment imported for the purpose of R&D, testing, benchmarking and evaluation, repair and re-export, and product development purposes will also be exempt from licensing requirements, provided that such products are used for stated purposes only and are not sold. After such a purpose is fulfilled, the products imported for the above-mentioned purposes have to be re-exported or destroyed beyond use.
- The Foreign Trade Policy allows sending capital goods, equipment, components, etc. abroad for repairs, testing, quality improvement and re-importing without an Authorization. Notification 23/2023 exempts repair and return of goods repaired abroad from licensing requirements.
- Lastly, the exemption has also been extended to laptops, tablets, All-in-one personal computers, and ultra-small form factor computers and servers that form an essential part of a capital good.
Notification 23/2023 does not provide the reason for imposing such a restriction. However, as per a media statement issued by the Minister of State for Electronics and Information Technology, Mr. Rajeev Chandrasekhar, the intent of introducing this amendment is to regulate imports to ensure that the Indian tech eco-system uses trusted and verified systems and to “reduce import dependence and increase domestic manufacturing of this category of products.”
While the initiative appears to be vested in the interest of fostering domestic manufacturing, given the short duration of transition period provided (i.e., till 1st November 2023), the restriction on imports could conversely result in supply-chain disruptions thereby impacting ease of doing business and the availability of such products in the Indian market. Moreover, restricting imports for these products may also lead to an increase in the cost of laptops, computers & tablets since the costs associated with obtaining an import license and related procedures & compliances would likely be included in the price of these products. Given that these products are now integral to the day-to-day lives of users, it will be important to assess how any potential increase in price would affect the end-consumer. It will be equally important to assess the impact of such a restriction on the availability of products in the market and whether local manufacturers would be capable of meeting the demand at this stage.
Link to Notification No. 23/2023 on Amendment in Import Policy of Items under HSN 8471 of Chapter 84 of Schedule-I (Import Policy) of ITC (HS), 2022 -reg, dated 3rd August 2023: https://content.dgft.gov.in/Website/dgftprod/92df276a-d49b-43b5-809b-ea2a3ff8c481/Notification%20No.%2023%20dated%2003.08.2023%20Eng-1%20(1).pdf
Link to Notification No. 26/2023 on Amendments to Notification No. 23/2023, dated 4th August 2023: https://content.dgft.gov.in/Website/dgftprod/f292ddaf-3a4e-40c1-afb6-67147f8d6b3f/DGFT%20Noti%2026%20dated%2004.08.2023%20English.pdf