While visiting New Delhi to participate in the upcoming G20 Leaders’ Summit this week, US President Joe Biden is expected to engage in discussions with Prime Minister Narendra Modi regarding India’s import restrictions on items such as laptops and other electronic products, according to individuals familiar with the matter.
Biden’s visit to India is scheduled from September 7 to 10, and he is set to hold a bilateral meeting with Modi on the second day of his trip.
India attributed its recent decision to impose restrictions on the import of various electronic items, including laptops, tablets, personal computers, and servers to concerns about ‘security risks to citizens’. The decision is slated to be effective from 1 November 2023.
Last month US trade representative Katherine Tai brought up this matter during her discussions with commerce and industry minister Piyush Goyal at the G20 Trade and Investment Ministerial. She expressed concern that the policy might negatively affect US exports to India.
While the Indian move is said to have stemmed from a desire to reduce Chinese imports and promote indigenous manufacturing, this argument is not sounding convincing to observers outside India.
On the face of it, the proportion of India’s IT hardware product imports from the US is relatively modest compared to its imports from other countries, among which China predominates. But prominent American computer and server manufacturers, including Apple, Dell, HP, and Cisco are worried because they rely heavily on manufacturing facilities in China and Southeast Asia to cater to the Indian market.
In recent decades, technology firms have established intricate and interconnected global supply chains. While the US continues to lead in the design and innovation aspects of the information and communications technology (ICT) sector, a substantial portion of manufacturing is contracted out to companies operating in China.
While the US administration has been evaluating essential ICT supply chains with the aim of decreasing its dependence on China, it is also aiming for a seamless transition. Conversely, India has assured the industry that it will streamline the import licensing process for companies.
Members of the industry have called on the government to reconsider the new import policy. Jason Oxman, president and CEO of the Information Technology Industry (ITI), a global trade association for the technology sector, has stated, ‘Companies like Apple, Dell, HP, and others are engaged in manufacturing in India and are eager to expand their operations. However, such transitions cannot happen overnight.’
In the previous month, a coalition of eight industry associations, including ITI, the Consumer Technology Association, and the National Association of Manufacturers, sent out a letter to both Katherine Tai, the US trade representative, and Gina Raimondo, US secretary of commerce. In the letter, they raised apprehensions regarding India’s dependability as a trade and supply chain partner.
The letter stated, ‘This policy, unveiled without advance notice or public consultation, has the potential to substantially disrupt trade, impede endeavors to further integrate India into worldwide supply chains, and have adverse effects on businesses and consumers in both nations. We strongly urge you to prioritize this matter in your discussions with the Indian government and take measures to ensure that any actions taken by India in this domain align with its international obligations.