Why India Banned Import of Laptops, PCs And What Will Be Its Impact

 

India has banned the import of laptops, tablets and personal computers with immediate effect.

According to a government notification, the purpose of this ban is to promote domestic production (Make in India).

According to the notice, the import of these banned products will be allowed through a valid license.

In the month of April-June, a total of $ 19.7 billion worth of electronic goods have been imported into India, including laptops, computers and tablets.

It has increased by 6.25 percent compared to the corresponding two months last year.

Dell, Acer, Samsung, LG, Apple, Lenovo and HP are some of the main companies selling laptops in India and most of the components and spare parts are imported from countries like China.

 

Shares of local electronics manufacturers rose

Shortly after the announcement, shares of local electronics manufacturers rose. Amber Enterprises India Ltd. Dixon Technologies India Ltd. gained as much as 3.3%. rose 5.5% and PG Electroplast Ltd. spiked 2.8%.

Further, the government's announcement is expected to impact companies that import bulk of their products from outside India. Tech giants like Apple will have to either start manufacturing their laptops in India or stop importing their gadgets to India.

The same rule will also apply to other PC manufacturers like Lenovo, HP, Asus, Acer, Samsung. This will likely lead to an increase in the price of current laptops, computers, MacBooks, and Mac Minis in the Indian market.

Most of the laptops and personal computers sold in India are manufactured or assembled in China. With the new rule, the government plans to shift all this to India. This is similar to what the country has achieved with smartphone manufacturing.

The companies, meanwhile, can apply for and obtain special permits to bring laptops into India.

 

Prices will increase

 

While the implication of the import restriction on laptops will be clear in the coming days, it is safe to say that the prices of the current laptops that are out in the market will increase. This is because, in the short run, the import restriction is bound to create a scarcity in the market. In other words, there will be higher demand and less supply.  

With the total Laptop/PC market size close to 8 Billion dollars annually and approximately 65 percent of units being imported, the government's move is aimed at promoting domestic production and reducing dependence on imports. The industry comprises around 12 million units, and this restriction may lead to some short-term supply disruptions, especially for brands like Apple, HP, and Lenovo,