Explained: Why India restricted computer imports and who needs a licence

The government of India placed restrictions on the import of laptops and computers to encourage domestic manufacturing and sales.

However, the Directorate General of Foreign Trade (DGFT) announced that it has decided to delay the licensing mandate for importing laptops, tablets and personal computers until November 1, 2023.

While placing import restrictions has been done on several items before, this move will likely impact major global electronic players. However, while restrictions are in place, Indian consumers may still be able to purchase foreign laptops and computers from abroad as long as they have an import license.

 

Why has this restriction been placed?

 

India has imposed restrictions on the import of personal computers, laptops, tablets, all-in-one PCs, 'ultra-small form factor' computers, and servers falling under HSN code 8741. These imports will be subject to a valid license for restricted imports. This move aims to promote domestic manufacturing of these products and reduce reliance on imports from China.

However, this restriction will not apply to imports under baggage rules.

 

Exemptions to the license

Some exemptions to the import licensing requirements include that individuals can import one laptop, tablet, all-in-one PC, or ultra-small form factor computer, even purchased from e-commerce portals, without needing an import license. Duties will still apply to these imports.

Additionally, laptops, tablets, all-in-one PCs, and ultra small form factor computers essential for capital goods are also exempt from import licensing requirements. For research and development, testing, benchmarking, evaluation, repair, re-export, and product development purposes, up to 20 items per consignment can be imported without a license. However, these items must not be sold; after the intended purpose, they must be either destroyed or re-exported.

The government has taken this step to boost its production-linked incentive (PLI) scheme for IT hardware. By promoting local manufacturing, India aims to strengthen its domestic production in the electronics sector.

 

Who handles import licenses?

All notifications on restrictions, quotas and conditions on the import of goods into India are managed by the Directorate General of Foreign Trade (DGFT).

The DGFT comes under the Ministry of Commerce and Industry and is responsible for administering laws regarding foreign trade, including import regulations.

Most import licenses are issued by the DGFT, although depending on the nature of the item and its restriction or quota, other authorities may be involved to ensure compliance with various regulations. These regulations include quality standards, safety requirements, and national security concerns.

 

Validity of license

Import Licenses are valid for 24 months for capital goods and 18 months for raw materials components, consumables and spares, with the license term renewable.

Computers and laptops would fall under capital goods.

 

Types of licenses

Export-Import Policy or Exim Policy outlines guidelines and instructions governing the import and export of products. Most import items fall within the scope of India's Exim Policy regulation of open general license (OGL) that allows importers to bring in certain goods without the need for individual licences. Items under OGL can be imported freely unless they fall under restricted or prohibited categories.

However, computers and laptops will likely fall into the restricted or specific license category. Restricted import licenses are typically issued for goods that must be monitored due to trade agreements, international obligations, or to protect domestic industries.

 

Eligibility for license

The portal to apply for a license for restricted imports can be found on the DGFT website. Importers require an importer-exporter code (IEC), a unique 10-digit code issued by the DGFT, to be eligible for the license according to the foreign trade policy. This requires a separate application process if the importer still needs to get one or if the IEC has been cancelled or suspended.

The user profile must be linked with an IEC, and a valid Digital Signature Certificate (DSC) must be registered in the system. This can be verified in the portal by going to the "View and Register Digital Signature Token" option from "My Dashboard."

All documents required must be in English or Hindi according to DGFT's 2023 procedure handbook.

 

Exemptions for importer-exporter code (IEC)

While IEC is compulsory for imports and exports, there are certain exemptions. This extends to individuals importing or exporting goods for personal use unrelated to trade, manufacturing, or agriculture. It also extends to ministries, departments of central government and agencies, and non-commercial PSUs, among others.

 

How to apply for the license:

1. The first step to apply for a licence is to visit the DGFT Portal - https://www.dgft.gov.in/CP/
2. Choose "Import Management System" from services
3. Select "Restricted Imports"
4. Apply for "Revalidation of Restricted Imports authorization" and fill out all the necessary details
5. At the end of the application, the importer must pay an application fee to submit their request.

 

DGFT will issue a restricted import license on successful application.

According to a report by Afleo Group, a consulting firm for importers and exporters, multiple restriction products can be imported under one licence, provided it is filled during the time of application.

The licence can also be amended to add or change the import goods applied for, although this may also come with a fee. Moreover, restricted import licenses can also be revalidated online at a price.