Panic buying? IT hardware imports rise 50% ahead of licence deadline

IT hardware imports have risen by as much as 50 per cent in August from July, The Economic Times (ET) has reported. This comes ahead of the licensing rules that take effect on November 1. The government imposed import restrictions on personal computers, laptops, tablets, and servers.

In the wake of these restrictions, companies are buying supplies as they fear a supply crunch in the future, the report cited industry insiders as saying.

Earlier, the Director General of Foreign Trade (DGFT) put the import of IT hardware under the restricted category, introducing a licensing mechanism. The notification was passed on August 3, however, was amended a day later to give the industry a time of three months to make arrangements for the new regulations.

Corporate buyers afraid of limited supplies

India’s August imports stood at more than 1.2 million units, which was significantly more than July imports, which stood at 800,000 units. This is primarily due to the enterprise customers and original equipment makers (OEMs) making advance purchases to ensure adequate supplies for the festive season and corporate orders. The ET report cited an industry body which put the rise in imports at 20-30 per cent.

The import rise is expected to continue in September as well, as it takes 4-6 weeks for consignments to reach India.

Companies are also avoiding their orders with Chinese firms, given the government’s approach towards it, an industry executive told ET. The trend is no different from what has been seen in India’s 5G development, where Chinese companies such as Huawei and ZTE have been effectively barred from participating. Another Chinese company, Lenovo, has not participated in government tenders in the last two years, the report said.

What are industry experts saying?

Director at Team Computers, Tejas Bagadia told ET, “Lots of global companies who have their shared services here — Amazon, Walmart, Google, Meta — have reached out to us, and preponed their buying plans.”

Bagadia said that he was getting inquiries from global firms about the supply situation of devices as they are apprehensive about their new employees having devices to work on. These companies faced challenges in acquiring machines for their employees during the pandemic, and they are being extra careful this time.

The logic behind import restriction

The government of India has argued that the restricted imports will support domestic manufacturing of IT hardware devices. This move also aims to reduce reliance on imports from China.