Making India an IT Hardware Powerhouse: Strategies and Progress

Introduction

India heavily relies on importing IT hardware such as laptops and PCs. To reduce this dependency and promote local manufacturing, the government is implementing strategies like:

• Linking import permissions to increased domestic manufacturing capacity.
• Introducing a credit system for imports, applicable once critical production levels are achieved.

Strategic Policy Measures

1. Import Restrictions Tied to Domestic Manufacturing

• The government plans to replicate the successful model from the tyre sector, where:
  • 2020 tyre import restrictions attracted investments of over ₹1,100 crore from global companies like Bridgestone, Michelin, and Goodyear.
• Similar conditions are proposed for laptops and PCs, where easing import rules will depend on commitments to manufacture locally.

2. Credit System for Imports

• A new credit system for IT hardware imports is being considered.
• The system will align imports with domestic production milestones, with detailed policies expected as local manufacturing expands.

WTO Commitments and Global Trade Concerns

1. WTO Constraints

• India’s membership in the WTO’s Information Technology Agreement (1997) binds it to zero-duty commitments on IT products, preventing higher import tariffs.

2. Global Pressure

• China dominates the global IT hardware market, holding:
  • 81% share of global PCs and laptops.
  • Exports worth $163 billion in 2022.
• Major global companies like Apple, Dell, and HP rely on Chinese manufacturing and have raised concerns about India’s import policies.
• Nations such as Japan and China have formally opposed India’s laptop import licensing measures.

3. India’s Security Goals

• India clarifies that its policies are aimed at achieving self-reliance and strengthening national security, not creating unnecessary trade barriers.

India’s Import Dependency

• In FY24, India imported electronic components worth $34.4 billion, making it the fifth-largest import category.
• Over 50% of these imports came from:
  • China: $12 billion.
  • Hong Kong: $6 billion.
• Over the past five years, imports from China and Hong Kong have significantly exceeded those from South Korea, Japan, Taiwan, and ASEAN nations combined.

Domestic Production Challenges

1. Slow Progress in IT Hardware Manufacturing

• Despite efforts like the 2023 Production Linked Incentive (PLI) scheme, India’s domestic production of laptops and tablets remains limited.
• 27 companies, including Dell, HP, Lenovo, and Foxconn, have been approved under PLI 2.0 but are still in early production stages.

2. Extended Import Authorizations

• To avoid shortages and price increases, import restrictions under the Import Management System (IMS) have been extended until December 31, 2025.

Way Forward

To reduce import dependency and achieve self-reliance, the government has outlined a multi-faceted strategy:

1. Strengthening Local Manufacturing

   • Speeding up PLI incentives.
   • Tying import permissions to domestic production growth.

2. Diversifying Trade

   • Seeking alternative supply chains to reduce dependency on China and Hong Kong.

3. Encouraging Investments

   • Developing an investment-friendly ecosystem for domestic and global manufacturers.

4. Balancing Global Commitments and Domestic Needs

   • Aligning policies with WTO commitments while protecting India’s strategic interests.

This plan aims to transform India into a leading hub for IT hardware manufacturing, ensuring economic growth and national security.