Laptop, PC import restrictions will lead to near-term price hikes, industry disruption: Experts

Apple, which currently imports its MacBooks to India, will also be impacted. Mac sales currently account for about 9-10 percent of its India business, slightly higher than the global average, as per industry estimates.

Industry analysts told Moneycontrol that while this was long expected, the suddenness of the move could disrupt the industry.

Neil Shah, partner at Counterpoint Research, said that a similar decision was taken in 2015, which led to the boom of domestic smartphone manufacturing as a part of the broader Make in India initiative.

“Today almost 98-99% smartphones are assembled and manufactured in India. Government wants to replicate the same for other high value categories like PCs and desktops. Currently, a third of laptops, PCs and desktops combined are assembled in India and majorly by Dell and HP,” Shah said.

A Dell spokesperson told Moneycontrol, "We are aware of the new regulations. Dell has been manufacturing in India for 15 years and we continue to work with the Indian Government on our plan."

Under the government’s Production Linked Incentive (PLI) Scheme for IT hardware, the cabinet has approved incentives worth Rs 17,000 crore for manufacturing laptops, tablets, all-in-one PCs, servers, and ultra-small form factor devices. The six-year scheme is expected to bring about incremental production worth Rs 3.35 lakh crore.

“There could be some price increase by enterprises in the short term for some of the products like by Apple whose products are 100 percent imported. But for Dell and HP, this could play up well as they already have manufacturing set up here,” Shah added.

Shah believes this is still the right time for pushing localisation of PC manufacturing, with fibre, 5G FWA (fixed wireless access) spreading fast. This is an $8-billion per year market to capture, he said.

According to IDC's Associate Vice President, Devices Research, Navkendar Singh, this should not be a surprise to the industry and the industry observers as this was bound to happen at one point. Government has been telling the industry to start manufacturing in India for a long time and majority of them have their assembling a lot of desktops anyway here, he said.

“India ships around 2 million laptops a quarter, and out of that, almost 1.5 million are imported. Every premium laptop is imported. The volumes are huge, there is also an import export imbalance here. But currently we don’t have the capacity to actually expand manufacturing immediately,” he said.

Singh added, “In the longer term it’s a good move, but in the near term, at least the next one year, this is a disruptive move as the industry was just coming out of slow consumerism.”

Singh wasn’t expecting this to happen now, just at the start of a very important consumer season as the government didn’t give them much time either. He expects that the industry will make a representation to give them a few months of relaxation.

“And if that happens, you’ll suddenly see a lot of shipments coming in the next one or two quarters. If the government doesn’t allow, you’ll see a huge price hike as supply will be lesser than the demand during a festive season,” he added.

In contrast, Ranjit Atwal, senior director analyst at Gartner, believes that there won’t be much of an impact as the inventory level for the PC manufacturers have already been high in 2023.

“Given the fact that inventory levels have been higher than normal in 2023 and demand has been relatively weak, the market shouldn’t be impacted unless the change lasts over for a significant amount of time,” Atwal said.

(The article was updated to include a statement from Dell.)