India's surprise import duty could aid Jio

India has put import restrictions on laptops, tablets, small-form-factor servers and personal computers to address security concerns and boost domestic manufacturing. The move precedes the launch of a cheap 4G-enabled laptop, JioBook, by Reliance Industries, one of the country's biggest conglomerates.

Under the new rules, importers will need to obtain licenses for these items. Those are likely to affect the import of devices from countries such as China and South Korea, with India's laptop and desktop market dominated by global brands including Lenovo, Dell, Apple, Samsung and HP.

"Exemption from import licensing is allowed for one laptop, tablet, all-in-one personal computer or ultra small form factor computer, including those purchased from e-commerce portals, through post or courier, subject to applicable duty payment," reads the notification issued by the India's ministry of commerce and industry.

The new rules have already led to chaos, with companies complaining that goods have been held up in customs. That has prompted authorities to issue a notification stating the regulation will come into force later this year, on November 1.

Domestic help

The move is in line with government programs such as "Make in India," which seeks to promote domestic manufacturing of technology and telecom goods. It could push several global manufacturers to set up operations in India. According to media reports, 44 companies have now registered for the Production Linked Incentive (PLI) IT hardware scheme the government previously launched.

Many observers have been surprised by the import duty on laptops and computers. Some view it as a return to "license-raj," referring to the period before economic liberalization in the early 1990s, when a license was required to take any business-related decision. The new rules are the latest in a series of unexpected decisions implemented without any warning by the Indian government. The recent move to scrap certain banknotes is another example.

There is also suspicion that the rules are designed to support Reliance Industries' JioBook, available for 16,499 Indian rupees ($199). It is currently unclear if the device is being manufactured in India or not.

The timing of the regulation is significant because the August-to-November period is a crucial one for device manufacturers. It is when several Indian festivals, including Diwali, are celebrated across the country and manufacturers typically offer significant discounts. As global manufacturers focus on acquiring the licenses needed to import products, they may face supply issues that push them to raise prices, thereby helping JioBook to gain market share.

Related posts:

— Gagandeep Kaur, contributing editor, special to Light Reading