The Indian government has announced that, with immediate effect, the import of all laptops and personal computers into the country is to be banned without special licence. This will inevitably impact global manufacturers such as Apple, Lenovo, HP, Acer and others as well as Indian consumers and businesses which are largely reliant on foreign made electronics. Significant price rises are expected as a result of a disruption to supply although it is hoped that ‘trusted’ brands will be granted permits quickly.
The move by the government is the latest stage of its ‘Make in India’ programme, which simultaneously supports local electronic manufacturing whilst imposing barriers on the import of foreign products, especially those which are produced in China. In May 2023, a support package worth $2 billion was announced. This initiative, and others like it, has proved successful in the smartphone market with companies such as Apple transferring some of its production to the country. The government hopes that an import ban on the IT hardware sector will have similar results.
The move comes at a time when Indian conglomerates, such as Reliance, are launching their own consumer electronics products, drawing accusations of preferential treatment. Although these companies are, in the short term, just as likely to source their products from abroad, including China, some believe that their government links will allow them to gain special licences more easily.
The decision is another illustration of political intervention in the functioning of global supply chains driven in this instance by regional rivalry between India and China and an industrial policy which prioritises local manufacturing. In this regard, Prime Minister Modi is following China’s own playbook of capturing upstream value by encouraging and compelling on-shoring of production. It is also a more extreme version of the USA’s own imposition of import tariffs on Chinese goods, a policy started under President Trump but continued under President Biden.
The decision will have obvious implications for the logistics and supply chain industry. Local and national supply chains in India will increase in importance at the expense of international services. This will not happen overnight. India must build the infrastructure – energy, transport, ICT and financial – as well as develop relevant skills amongst its workforce before it is able to challenge China effectively. However, the direction of travel towards higher levels of global supply chain fragmentation is clear.
Author: John Manners-Bell
Source: Ti/Foundation for Future Supply Chain
