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India implements import curbs to boost domestic electronics production

In an effort to strengthen its domestic electronics manufacturing sector, the Indian government has introduced new regulations that mandate companies to obtain licenses for importing laptops, computers, and tablets.

The Directorate General of Foreign Trade notified that import restrictions will apply to laptops, tablets, all-in-one personal computers, ultrasmall form factor computers, and servers. Microcomputers, large or mainframe computers, and specific data processing machines will also be subject to these restrictions. Nevertheless, there will be exemptions for up to 20 items per consignment for purposes such as research and development, benchmarking, repair and return, or product development.

This decision follows Prime Minister Narendra Modi's announcement of a substantial $2.1 billion (170 billion rupees) incentive plan aimed at enticing computer manufacturers to invest in India. This new financial package exceeds the $888 million (73.5 billion rupees) allocated in 2021 for a program that failed to attract companies due to the lack of meaningful incentives. The latest plan offers a 5% cashback to companies on the factory gate price of finished products, while manufacturers will also benefit from financial incentives for locally sourcing components.

Decline in India's PC Market

According to research published by IDC in May 2023, India's PC market witnessed a significant decline of 30% year-on-year in the first quarter of 2023, with only about three million units shipped. The consumer segment experienced a substantial downturn of 36.1% year-on-year, mainly attributed to slowing demand and low market sentiment. Similarly, the commercial segment declined by 25.1% due to reduced and delayed procurement by enterprises and small and medium-sized enterprises (SMEs).

Even the top five companies dominating the Indian PC market experienced a decline in unit shipments during the quarter. Dell Technologies, in particular, faced the largest slump, with its unit shipments dropping by 49.8%.

Navkendar Singh, Associate Vice President of Devices Research at IDC India, South Asia & ANZ, highlighted that PC demand has been sluggish for several quarters. He attributed SMEs delaying procurement to credit crunch, while enterprises were reducing or delaying procurement due to recession fears. However, there is hope for a gradual recovery in the PC market from late 4Q23 onwards.

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