The government last week rolled back certain checks it had introduced for imports of electronics hardware such as laptops, tablets and servers. On August 3, these items were moved to the “restricted” category for imports, which meant an authorisation became mandatory for shipments to be allowed in. The requirements were not meant to come into force until October 31, and in the period since, the administration held extensive talks with the industry. Now, importers need to merely secure automatic approval by submitting their import details on a government website.
In 2022-23, the country imported $8.7 billion worth of these goods, powered by a rapidly hungry digital industry and a booming electronics consumer market. Of this, close to 60% of the imports by value originated from China. Government officials have cited security concerns as one of the reasons for the import curbs, although the larger context of the move was to prod electronics companies to manufacture in India.
That the government wants to encourage domestic production via trade interventions is understandable — countries around the world use some form of trade friction to help their economy. In fact, such measures have helped India boost its mobile manufacturing and assembly industry. But the August 3 decision may have been ill-thought and the government’s recognition as such and so, the course correction is welcome. The implementation of the checks was rightly put off till the industry was consulted, and a balance has now been found between monitoring imports and avoiding any supply chain disruptions. Welcome as the defusing of a potential crisis is, the episode must serve as a precedent. India must not return to a licence raj via backdoor, or signal policy fragility — two of the biggest fallacies that could hurt the economy.
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