Centre looking to increase local sourcing of IT parts to $20 billion, to restrict Chinese imports

The IT hardware industry is poised to treble in size by 2027, reaching around $30 billion.

The government is reportedly pushing big for local sourcing of components for laptops and servers, targeting around $20 billion over the next four years against the $1 billion procurement at present and is set to curb imports from China.

As part of “trusted sources” norm, the Centre is expected to restrict imports of hardware components from China and other non-trusted sources to boost local manufacturing, the Times of India reported on September 23.

“We will restrict the movement of parts and components from China, as the focus is on trusted sourcing and trusted locations. Also, we need to find out ways to encourage companies to ‘Make in India’, rather than continue with just imports,” the daily quoted a source as saying.

The implementation of the Rs 17,000 crore production-linked incentive (PLI) scheme for IT hardware and the start of an “import management system” from November 1 reflect the government’s resolve to establish a robust ecosystem for device and server manufacturing within India, like the successful model for smartphone manufacturing, the report quoted sources as saying.

Moneycontrol couldn’t verify the report independently.

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The over-dependence on a single country, particularly China, for critical components poses risks to supply chains and national security. The government wants a diversification of sourcing, including increasing local production and sourcing from trusted nations.

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Minister of state for IT & electronics Rajeev Chandrasekhar refused to comment on China specifically but he told ToI, “We want the supply chain that is going to power India’s internet, power India’s cloud, and power users of India should be absolutely trusted. And, as part of the trusted theme, we think a large and growing part of the supply chain should be of Indian origin, or Made in India.”

At present, approximately 10 percent of the IT hardware supply chain was sourced from India, accounting for around $1 billion within the total industry size estimated to be $8-10 billion, the minister said.

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India’s footprint in the digital supply chain would considerably increase from 8-10 percent to approximately 70 percent within the next four years, the minister said.

The IT hardware industry was poised to triple in size by 2027, reaching approximately $30 billion. In this growth, the component share sourced from India was expected to reach about $20 billion, he added.