India’s Electronics Import Curb Is Aimed To Address Trade Imbalance With China

India’s recent import restrictions on electronic goods are aimed at boosting domestic manufacturing capabilities and addressing import imbalances with China, according to a person with knowledge of the matter.

The restrictions are not expected to increase prices, as laptop and PC makers have excess capacity in India, the person said on condition of anonymity.

Whether India will have sufficient capacity has been a concern for trade experts.

Through the move, India wants to see companies invest and produce in the country to meet domestic demand and also export, he said.

That is the iPhone model, and India is looking to replicate it for laptops and PCs, he said.

Apple‘s contract manufacturers are among the mobile manufacturing players that have agreed to set up production units in India under the production-linked incentive scheme for large-scale electronic goods.

The move is also intended to reduce import dependency on China, which is India‘s largest electronics trade partner.

India wants to address its trade imbalance with China. If capacities have come up in the country, let production take place here rather than importing, the above-mentioned person said.

China remains India's top import source nation for electronic components, accounting for a 32.13% share, according to the June monthly bulletin on foreign trade.

Trade experts agree that the policy move of restricting certain imports will add incentive to the ‘Make in India‘ campaign and make other countries look at India’s domestic market as a manufacturing outlet to capture its user market.

During the April-June quarter this year, imports of electronic goods increased to $6.96 billion from $4.73 billion a year ago.

India is not expecting much international backlash, as the items have been restricted and not prohibited, the above-mentioned person said. Countries have the option of taking a licence and exporting to India, he said.