Unreasonable crackdown on foreign companies adds another "crime", India suddenly restricts the import of computer business | Indian government | Foreign companies

In order to fulfill the long-standing wish of "Made in India", the Indian government announced on August 3rd that it will restrict the import of laptops, tablets, personal computers, and other electronic devices. Importers need to apply for a license to be exempted, and the restriction order will take effect immediately. The next day, on August 4th, India revised its immediate decision to postpone the implementation of new restrictions until November 1st.

"India's sudden decision to restrict the import of laptops and tablets looks more like bureaucratic despair than a carefully considered industrial policy." The Indian Business Standard commented that the Modi government's policy changes will only make people feel that "the Indian government is acting recklessly.".

India's use of administrative means and market barriers to seize power is undoubtedly a reversal of the era of "license rule" in the eyes of Anaya Batacharia, a journalist from Quartz Finance Network in the United States. In that era, without government approval, any business decision was difficult to make. Uncertainty is the enemy of economic development, and opacity runs counter to the Indian government's goal of transforming the country into an electronic powerhouse.

Import restrictions will lead to chaos in the Indian domestic market

According to statistics, about 65% of laptops and personal computers in India rely on imports. India has used administrative measures to attempt to replicate the previous "lockdown" of the smartphone industry into the computer industry, causing chaos among major computer suppliers.

Bloomberg reported that the sudden restrictions caught the entire industry off guard. Computer suppliers, including Dell, Apple, and Samsung, quickly took action on August 3rd to freeze all new imported products.

According to Reuters, from April to June this year, India's electronic product imports amounted to $19.7 billion, an increase of 6.25% compared to the same period in 2022. According to Indian government data, the import of personal computers such as laptops and tablets accounts for approximately 1.5% of India's annual import volume. According to data released by market research firm IDC, in the first half of 2023, the top five Indian laptop market share rankings were HP, Dell, Lenovo, Acer, and Asus; The top five tablets are Samsung, Apple, Lenovo, Realme, and Acer. The Financial Times pointed out that the new restrictions will create an obstacle that may slow down import flows.

Some Indian media have pointed out that the new restrictions will lead to a decrease in the supply of laptops in the current market, causing prices to rise accordingly. A senior official from the Indian Ministry of Science and Technology also stated that companies importing laptops, tablets, and other IT products from overseas to India will have at least one month to apply for import licenses, which will cause international computer manufacturers to delay the release of new products in India and even lead to product shortages, while the Indian market still heavily relies on overseas shipments.

At present, India does not have the ability to achieve "Made in India"

The Indian government did not directly explain the reasons for this new measure, but Rajiv Chandraseka, the Minister of State for Electronics and Information Technology of India, stated in a tweet on August 4 that the Indian government's goal is to ensure reliable hardware and systems, reduce dependence on imports, and increase domestic manufacturing of related products. In May of this year, the Modi government announced a six-year, $2 billion fiscal incentive plan to attract laptop, tablet, and other electronic hardware manufacturers to shift production to the country. Some American media believe that India's recent "restriction order" is an upgrade to its plan for May this year.

The US Consumer News and Business Channel reported that the Indian government is seeking to position itself as a high-tech manufacturing center for products such as semiconductors, shifting from being a consumer of electronic products. However, the road to localizing computer production is fraught with difficulties. The components of electronic devices such as laptops are complex, and over 90% of computer components in India rely on imports. Some analysts believe that "manufacturing" in the so-called "Made in India" refers more to "assembling" completely disassembled components, and India's focus can only be on improving assembly capabilities. In addition, India itself does not have any cutting-edge semiconductor factories, and there will not be any cutting-edge chip factories in the foreseeable future, so it can only continue to import high-end chips.

Liu Zongyi, Secretary General of the China and South Asia Research Center at the Shanghai Institute of International Studies, once wrote an article pointing out that the Modi government hopes to use foreign capital and technology to promote the development of its own industry, but on the other hand, it is full of jealousy and hatred towards foreign capital occupying the domestic market in India. Therefore, when industries supported by foreign capital have developed to a certain extent, and markets that did not exist before are opened up, India will be eager to take possession of them.

Long term unreasonable crackdown on Chinese funded enterprises

For a long time, India has had a bad habit of suppressing foreign enterprises, mostly using non market-oriented means to coerce foreign enterprises to help India establish and improve its industrial and supply chains, and achieve large-scale industrialization. Between 2017 and 2018, the import tariff rate for mobile phones in India increased from 10% to 15%, and then to 20%, in order to suppress foreign brands and support local mobile phone brands.

Zhu Ming, a special researcher at the Regional and Country Research Institute of Sichuan Normal University, pointed out that India has been unfriendly to foreign investment for a long time and highly vigilant against foreign companies. Therefore, the business environment in India has been very poor for a long time, and it has also adopted a suppression trend against multinational enterprises.

Chinese companies in India are also victims of unreasonable suppression by the Indian government. In recent years, due to fluctuations in the relationship between China and India, India has carried out a series of containment and crackdowns on Chinese enterprises. According to reports, India has banned at least 300 Chinese applications and imposed strict restrictions on Chinese companies and funds. India also uses a series of means to seize Chinese companies and indirectly acquires Chinese companies in India. In June of this year, the Indian Economic Times quoted sources as revealing that Indian government officials had recently held a meeting with Chinese mobile phone manufacturers, requiring Xiaomi, OPPO, Realme, Vivo, and others to introduce Indian partners for local businesses. At the same time, Indian nationals were appointed as key positions such as CEO, COO, CFO, and CTO.

According to a report by Ernst&Young, 80% of laptops sold in India are imported from China, and about two-thirds of tablets come from China. Chen Jing, Vice President of the Science and Strategy Society of the University of Science and Technology of China, stated that it is clear that India wants to promote its "experience" in the mobile phone industry to the computer industry and transfer its industrial and supply chains from countries such as China.

Analysts point out that India may believe that directly plundering Indian companies and seizing China's industrial and supply chains is the most convenient way to achieve "Made in India". India's intention is very clear, attempting to leverage the so-called "Indo Pacific strategy" of the United States to connect with the West, while containing China, promoting the transfer of global industrial and value chains, and seeking economic development within India.

Faced with the long-term and unreasonable suppression of Chinese enterprises by the Indian government, relevant departments such as the Ministry of Foreign Affairs and the Ministry of Commerce have repeatedly expressed strong dissatisfaction, demanding that India create a fair, just, and non discriminatory business environment for Chinese enterprises in India. China has always demanded that Chinese enterprises operate legally and compliantly overseas, while firmly supporting Chinese enterprises in safeguarding their legitimate rights and interests.