India’s New System to Regulate IT Hardware Imports

India's New System to Regulate IT Hardware Imports

India rethinks the IT hardware import ban, shifting the tech landscape. Discover the pivotal changes and their impact.

India has long held a prominent position in software and IT services. However, the country primarily relied on imports when it comes to hardware, especially laptops and personal computers (PCs). 

In recent years, the government has been actively promoting domestic production of laptops and PCs through initiatives like ‘Make in India’. As part of this effort, India has also introduced some regulations regarding laptop imports.

These regulations involved an import licensing system, initially put in place on August 3, 2023, to ensure that only ‘trusted hardware and systems’ enter India. However, after facing opposition from the industry, the implementation of this system was postponed for three months.

Then, on October 19, 2023, another significant development occurred in this matter.

What’s Happening?

The Indian government has adjusted its approach to banning the import of IT hardware goods, such as laptops and computers, as reported by The Times of India. Now, the government has established an ‘Import Management System’ for companies that send these devices to India.

Under this system, IT hardware companies must register their import-related data and provide details about the countries they are importing from. The primary motive behind this decision, as per the Indian Express, is to monitor the import of laptops and computers, especially since most originate from China.

Reasons For Import-Related Decisions

The Electronics and IT Department Secretary, S Krishnan, has revealed that numerous applications have come under the PLI scheme, which will be evaluated within the next one to two months. The government’s focus is on promoting the domestic production of laptops, but many companies heavily rely on China for both fully manufactured units and components. The government has clarified that companies should either start manufacturing in India or adhere to the ‘trusted source’ criteria, which means sourcing from places other than China.

India aims to reduce its dependence on China for IT hardware devices, including laptops, and encourage local production. There are also security concerns related to this. In August 2023, there was a decision to ban the import of devices like laptops and PCs due to the continuous rise in electronic goods imports into India. The government saw this as an important opportunity for domestic manufacturers to step in and fill a significant gap in the market.

However, due to opposition from the industry and international markets, the government had to postpone this decision. Now, they have introduced the ‘Import Management System’ to address these concerns.

A Look At India's PC Market

The traditional PC market in India, which includes desktops, notebooks, and workstations, faced some challenges in the second quarter of 2023. According to Business Insider, the International Data Corporation (IDC) reported sales of 3.2 million units during that period. This shows a decline of 15.3% compared to the same time the previous year. However, there was a 5.9% increase compared to the previous quarter.

All market segments saw a decline in the second quarter of 2023. The notebook category, which holds the largest market share, experienced an 18.5% year-on-year decline, while the desktop category declined by 7% year-on-year. Both the consumer and commercial segments also recorded declines of 17% and 13.8%, respectively.

What’s Next?

According to Statista, the desktop PC market in India is expected to generate a revenue of US$1.9 billion in 2023 and is projected to grow at a Compound Annual Growth Rate (CAGR) of 2.79% from 2023 to 2028. 

Moreover, the volume of the desktop PC market is estimated to reach 5.2 million units by 2028, with a slight dip in growth of -0.2% expected in 2024.

As for the ‘Import Management System’ decision, it initially raised concerns in the industry and prompted complaints from countries exporting to India to the World Trade Organisation (WTO). However, this updated decision appears to be less restrictive and more favourable.

That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!

*The article is for information purposes only. This is not an investment advice.

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