Navigating India's New IT Hardware Import Policies: A Comprehensive Guide

The Central Government of India with the Directorate General of Foreign Trade (DGFT), under the aegis of the Ministry of Commerce and Industry, amended the import policy by restricting the import of Information Technology (IT) Hardware, earlier this year. The policy has stirred into effect from November 1st, 2023 intending to regulate and incentivize the import of laptops, tablets, all-in-one personal computers, and ultra-small form factor computers. The main objective of imposing these policy conditions was to ensure a spur in domestic manufacturing and to reduce the dependence on hardware imports. With India being a fast-growing market for digital products, the emphasis on the growth of domestic markets is of extreme significance to the Indian economy.

Key Provisions of the Import Policy

Import Authorization Requirement:

The import of laptops, tablets, all-in-one personal computers, and ultra-small form factor computers and servers under HSN 8471 now require import authorization. The import consignments till October 31st, 2023 were cleared without the need for import authorization.

Exempted items from import authorization requirements:

• Import of one such item of the above-listed products

• Up to 20 such items per consignment for the purpose of R&D, Testing, Benchmarking and Evaluation, repair and re-export, and Product Development purposes. Further, the imports shall be allowed on the condition that the imported goods shall be used for the stated purposes only and will not be sold.

• Re-import of these items repaired abroad and when the item is an essential part of a capital good.

• Import for repair, return, or replacement of IT hardware sold earlier and re-import of such items repaired abroad, on a self-certification basis.

• IT hardware manufactured in Special Economic Zones (SEZ) can be imported in Domestic Tariff Area (DTA), subject to specific duties.

• Private entities importing products for supply to Central Government or State Governments or agencies or undertakings owned or controlled by the Central or State Government for Defense or Security purposes, provided a valid End User Certificate is submitted.

• SEZ units and EOUs/EHTP/STPI/BTP’s import of IT hardware only for captive consumption.

• IT hardware items essential for capital goods

Additional Clarifications:

The DGFT time and again has made clarifications and directions for the smooth implementation of the import policy. Apart from the above, the other clarifications notified are the non-restriction of import of spares, parts, assemblies, sub-assemblies, components, and other inputs for the IT hardware. Further, the requirement of import authorization that is essential for the import of the IT Hardware has come into effect from November 1st, 2023 and importers are permitted to apply for multiple authorizations. These issued authorizations shall be valid until September 30th, 2024.

How to obtain Import Authorization

The application for an import authorization shall be done through the DGFT website. The DGFT has initiated an import management system for gearing up the restriction on the import of IT Hardware Devices; claiming the application process to be simple and non-restrictive. The step-by-step guideline for application is as follows:

Firstly, the User needs to register on the DGFT portal; after successful login, the User shall have valid login credentials.

Secondly, the User shall apply for Restricted Imports- Permanent IEC User by following the below provided steps-

1. To apply for the same, the User should have an active bank account to enter the details and for payment of the application fee.

2. On the DGFT website, navigate to services > Import Management System > Import Authorisation for Restricted Imports > Apply for new Authorization

3. The User will reach a Draft Application screen, where all draft applications will be displayed.

4. On the Draft Application screen, the User should select “Start Fresh Application” or “Proceed with Existing Application” if there is a saved draft application.

5. “General Information Screen” will appear, wherein details such as IEC, branch code, name and mobile number of the nodal officer needs to filled and saved.

6. On the Import Item Type screen select the type of product to be imported.

7. The User will be guided to the Details of Items of Import screen, where they should fill in details of items for import, details of import under license of the given applied items in preceding 3 licensing years (Optional), and declare sales/turnover of items (Imported/Indigenous). Click “Save and Next”

8. Subsequently, the user needs to select the port and purpose of import

9. The User will be guided to the Other Details screen; fill in details of Canalised Item Details (If the Items are not Canalised you can select “No” in the radio button as in this example) and in case of supplies to the Govt. Department (including Police / Defence Organisation). Please enclose a copy of the recommendation and End User Certificate (If the Items are not for Govt. supplies you can select “No” in the radio button) and click on “Save and Next.”

10. Then the User will reach the Declaration screen and have to accept the terms and conditions check box. Further, the User should update the “Place” field if required and then click “Save and Next”.

11. The User will be guided to the Summary Page, the User can verify the filled-in details in previous screens and can click on the “Print Summary” button to see the printable version of the filled-in form. Finally, the user clicks on the “Payment” button to submit payment for the application.

12. On application fee payment screen the User can verify the fee details and click on “Submit” button to make the payment against the application.

13. After Successful Payment, the User will be redirected to the DGFT Website and the receipt shall be displayed, the user can also download/print the receipt.

14. The User will receive the application submission message with File number on the screen. User will also receive email/SMS for file submission. If the User clicks on “OK” button on the E-payment receipt, the user will be redirected to Submitted applications via My Dashboard.

This online authorization system is designated to streamline the import process with a one-week approval target; thereby ensuring prudent and efficient import monitoring and safeguarding the interests of the country, alongside, supporting the domestic IT industry. The registration done as per the guidelines above shall be valid till September 30th, 2024 and importers are granted the flexibility to apply for multiple authorizations.

This import management system permits subsequent filing of amendments to the online applications. The User can now amend the quantity specified in the Import Authorization, subject to the condition that the overall value of authorization remains unchanged; making it a dynamic and user-friendly feature that aligns with the evolving nature of trade and ensures businesses adapt to the changing demands.

Way Forward

After the mentioned validity period, from October 1st, 2024 the government aims to implement an authorization mechanism with quotas and with the possibility of annual renewal. This phased approach to the implementation of this import policy restriction is a strategic plan to fulfil the objective of meeting 70% of the country’s IT hardware requirements through local production within the next three consecutive years.

The objectives behind the implementation of the policy can be stated to be major investments into local industry, and the creation of employment opportunities. Apart, from the implementation of the restrictive policy, in order to achieve the above objectives, the country should focus on building comprehensive strategies to attract investments and strengthen manufacturing networks. Further, the government should create favorable conditions for companies to expand their operations and encourage partnerships and collaborations that facilitate technology transfer and skill enhancement in the IT hardware sector to build local expertise and capabilities.

Our Role as Foreign Trade Policy Experts

Possession of an import authorization for the import of IT Hardware other than the exempted categories has been made mandatory. Our experts having catered to various industries and having experience in handling import and export promotion and regulatory matters, stand ready to guide our clients through the intricacies of the import policy, application procedures, and filing of amendments, ensuring a seamless and compliant import process, supporting the growth and sustainability of businesses in the evolving foreign trade environment.

Our expertise ensures an understanding of the policy nuances and complete assistance throughout the application and post-application processes. Further, our team eases the burden of filing amendments under the policy ensuring complete compliance with policy requirements while keeping in mind the strategic objectives of businesses.

Disclaimer. This article constitutes a part of the Firm's internal resource materials and is made accessible on the Firm's website with the intention of offering knowledge and awareness to its employees and clients. The opinions and information provided in this article are not legally binding on any governing authority, and there is no guarantee that the authorities will not adopt a position contrary to the views expressed herein. The article takes into account the prevailing foreign trade policies as of its publication date, and any decision to update this article following changes in the law is at the sole discretion of the Firm. Any party other than those explicitly mentioned above should seek prior written advice from the Firm or the article's author before relying on the content for the purpose of making any commercial decisions.

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