4 Stocks to Watch Out for as India Restricts Computer & Laptop Imports


According to the notice, from 1 November 2023, the import of these restricted items would now require a valid license.

The new law implies that laptop and computer giants like Apple, Dell, Lenovo etc., cannot simply manufacture their products elsewhere and sell them in India. They are now required to manufacture in the country to tap into the burgeoning Indian market.

This move, driven by security concerns and domestic manufacturing goals, aligns well with the government’s Atmanirbhar Bharat initiative.

From the production-linked incentive scheme (PLI), specifically for large scale electronics manufacturing, to the NLP policy, to a comprehensive effort to enhance the logistics ecosystem in India, the government is leaving no stone unturned.

And the shifting global supply chain dynamics are giving this a much-needed impetus.

This gradual shift towards India and other countries (Vietnam, Thailand) as a global supply chain hub, is not a new approach. It comes from a global business strategy referred to as the China-plus-one strategy. The term is not new and was coined way back in 2013.

According to the China-plus-one strategy, companies must avoid investing only in China. Instead, they must aim to diversify their businesses to alternative destinations.

While the dire need for diversification was felt before, it only came to fruition after the pandemic.

The Covid-19 pandemic caused several bottlenecks in global supply chains, leading to a new wave of diversification in supply routes and manufacturing hubs away from China.

India’s ambitious pursuit to become a global laptop manufacturing hub

India being the front-runner is strategically positioning itself to make the most of this opportunity. And the outcomes are increasingly visible.

Amazon plans to set up its first production line for its TV Firestick in India. IKEA plans to build a 48,000 square-metre shopping centre in northern India. Foxconn, popular for manufacturing 70% of the world’s total iPhones, will now foray into manufacturing AirPods in India.

Apple has also joined the bandwagon, planning to manufacture its iPhone 14 in India. However, the tech giant is refraining from manufacturing its world-renowned laptops in the country, choosing to work with Vietnam instead.

It will start producing Mac Books in Vietnam by mid-2023. Vietnam is well-placed to snap up supply chain shifts from China for laptop manufacturing by 2030.

Apple’s move to Vietnam comes despite the enhancement in the PLI limit announced by the government.

Leaving nothing on chance

Earlier this year, the government approved a 170 bn incentive scheme for manufacturing laptops and servers in India, increasing the PLI from the earlier 73 bn, a 132% jump. This new plan comes with a 5% incentive to companies that make local investments and the potential to enhance it by an extra 3% if they also procure specific parts from local suppliers.

The goal is to cater not just to local demand but also to bolster exports.

Apple, given its substantial export value, was a prime target for the government. So, when it booted India for Vietnam, it seems to have prompted the government to restrict laptop imports. And for good reason.

India has seen an increase in imports of electronic goods and laptops/computers over the last few years. Electronics imports in India, which include laptops, tablets and personal computers, stood at US$ 19.7 bn in April-June 2023, up 6.25% YoY.

Moreover, computer hardware manufacturing growth in India has been dismal. Between 2014-15 and 2019-20, the compounded annual growth rate (CAGR) for computer hardware was only 3.8%. It was 64% for mobile phones and 23.5% for the entire electronics industry.

This poor growth comes on the back of imports, ranging between 7-10% of the country’s total merchandise. The majority of them come from China. 87% of laptops and 63% of tablets are imported.

Therefore, as tech companies diversify their manufacturing hubs, India wants to grab a sizeable chunk of that pie.

But Vietnam and Thailand are well on their way to becoming the world’s laptop manufacturing centres. Moreover, India and Vietnam have an FTA, which allows laptops assembled in Vietnam to be sold in India without customs duties.

This agreement, in tandem with the cost (of manufacturing) differentials, makes it tough for the country to compete on an equal footing.

Addressing the US$75 bn opportunity

Given the outsized growth prospects of laptop manufacturing, India aims to become a global hub for manufacturing laptops and tablets.

The opportunity can be huge. Not only can it go a long way in lowering India’s import bill, but it can also expand its export base and generate employment.

As per the Electronics Sector Skills Council of India, electronics manufacturing services can employ over 6 m individuals by the end of 2025-26. This implys an astonishing 400% growth from the current 1.2 m individuals.

The Ministry of Electronics & Information Technology is projecting the electronics manufacturing sector to expand from the current US$ 75 bn in 2020-21 to US$ 300 bn by 2025-26. These numbers imply a growth of 300%.

The main drivers of growth in India’s electronics manufacturing include mobile phones, IT hardware (laptops, tablets), consumer electronics (TV and audio), industrial electronics, auto electronics, electronic components etc.

Transposing mobile phone success to laptops

Judging by the current projections, it appears the government aims to replicate, in the laptop sector, what it successfully achieved in the mobile phone sector.

Starting in 2016, the government raised tariffs on imported mobile phone parts, and in April 2018, it imposed a 20% tariff on importing an entire mobile phone. The idea was to enhance mobile phone production in India, and it succeeded.

India transformed from being a net importer in 2017 to a net exporter of mobile phones in 2022. And now, it is anticipated that India might account for around 50% of Apple’s worldwide iPhone production by 2027.

The laptop manufacturing sector can also go the same route, with some of the top companies leading the way.

Netweb Technologies India is one of India‘s leading high-end computing solutions providers, with fully integrated design and manufacturing capabilities.

Dixon Technologies is the largest homegrown design-focused solutions company engaged in manufacturing products in the consumer durables, lighting, and mobile phones/smartphones markets in India.

Optiemus Infracom is primarily engaged in the distribution of mobile handsets of reputed brands like Nokia and Samsung for the last 25 years.

Avalon Technologies is a leading fully integrated electronic manufacturing services company with end-to-end capabilities in delivering box-build solutions, focusing on high-value precision-engineered products.


India’s drive to establish itself as a global laptop manufacturing hub is both strategic and ambitious. With recent restrictions on imports and an eye on replicating its mobile phone manufacturing success, the government aims to tap into this potential US$ 75 bn market.

The country still faces a lot of challenges, from logistical to facing different laws in different states. According to Mr Panzica, a Foxconn employee, “India is the wild west in terms of consistent rules and getting stuff in and out.”

However, the consistent and evolving government’s policy thrust is adding impetus to India’s competitiveness.

Will India succeed in achieving this goal? We can’t say for sure. But people must have asked the same question back in 2016.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com

Leave A Reply