US Technology Businesses Criticize India’s Electronics Import Restriction!

Globalization has become extremely popular in the last few decades as countries around the world have stepped up the volume, velocity and value of global trade.

In fact, according to statistics, world trade volumes are roughly 45% times as compared to the early days of the General Agreement on Tariffs and Trade, or GATT, which translates to a 4500% growth from 1950 to 2022.

A lot of this has to do with better regulations, trade agreements, technological advancements and logistics, among other reasons. However, the desire to lead the technological race has made some countries reconsider their stance on trading with others.

Recently, the US, Japan and the Netherlands imposed restrictions for microchip exports to China, as they seek to take the lead in AI (artificial intelligence). China retaliated by imposing restrictions on the export of gallium and germanium (materials used in the manufacturing of microchips), for which exporters will need special licenses. (read more here!)

Interestingly, all this is happening when countries are calling for global collaboration to control and direct the advancement of artificial intelligence, given the recent boom in the sector.

Now, India has introduced new rules for US-based conglomerates and trade bodies aren’t too happy about it. What’s it all about? Let’s explore!
 

What Did The Indian Government Do?

 

• Around a fortnight ago, the government of India announced a set of new rules that would see restrictions on the import of laptops, tablets, personal computers, ultra-small form factor computers, servers etc. to the country.

• The reason included security concerns and plans to boost products made within the country, under its “Make in India” initiative, which would also see reductions in the cost of such electronic devices.

• Initially, the move was to be implemented with immediate effect but was later revised to come in after three months, i.e., on November 1.

• The center clarified that restricted imports would be allowed after obtaining valid licenses.

 

Which US Organizations Raised Concerns?

 

• Global IT conglomerates such as Apple, Intel, Google, Lenovo, Dell Technologies, HP and others approached the US government to request the Indian government to reconsider the move.

• Reportedly, the companies have asked the US government to “use every available forum” to convince India to reconsider.

• According to the report, a letter dated August 15 (interestingly on India’s Independence Day) mentioned eight US-based trade bodies backing the appeal to reconsider the move.

• The trade bodies, which included the Consumer Technology Association, Information Technology Industry Council, Semiconductor Industry Association and United States Council for International Business raised concerns about the country’s reliability as a trade and supply chain partner.

• Another concern highlighted the reluctance to deepen the bilateral economic relationship between the two countries.

 

What Did India Say?

 

• Defending its move, Rajeev Chandrashekhar, Minister of State for Electronics and Information Technology clarified the move was not made to exploit authority but instead to ensure that only trusted parts were used within the country’s tech eco-system, reduce imports and increase domestic production.

• Chandrasekhar said, “This is certainly not an attempt to go back to the licence raj. As we increase the digitisation of our economy, we certainly want to make sure that the elements of hardware that are going into the digital economy are all monitored and come from trusted sources.”

• “In hindsight, this should not have been called curbs or licensing. This should have been called more of an import management system."

For businesses/companies/traders looking to apply for licenses can do so from the Directorate General of Foreign Trade’s (DGFT) online portal, which will be issued in 3-4 days if all details are filled in properly.

Do you think such trade restrictions will hamper competition, bilateral trade and collaborative technological advancements?

Let us know in the comments below!