WHEN LICENCE CONTROLS HURT

THE GOVERNMENT WANTS TO BOOST DOMESTIC MANUFACTURING OF IT HARDWARE BY IMPOSING CURBS ON IMPORTS OF LAPTOPS, PERSONAL COMPUTERS AND SERVERS, BUT EXPERTS CAUTION AGAINST A RETURN OF THE LICENCE-PERMIT REGIME

- M.G. Arun

The Union government's decision last month to restrict the import of laptops and computers has led to a lot of consternation in industry circles. While the government justifies the move that mandates a licence for importers-to be implemented from November 1-as one that will encourage domestic production of laptops and computers, there is widespread concern that the decision negates the fruits of liberalisation set off three decades ago. Some experts also view this as a return of the licence-permit' raj. They fear more products across a wider range coming under import controls, what they call a 'protectionist' approach that runs contrary to the foundational principles of the World Trade Organization (WTO).

On August 3, the Directorate General of Foreign Trade (DGFT) imposed import restrictions on seven items, including laptops, tablets, personal computers and servers. However, a day later, the DGFT said it was deferring the implementation of the restrictions till October 31. Only laptops, tablets, all-in-one PCs, ultra-small form factor computers, and servers that are integral to capital goods will be exempted from import licensing requirements. Moreover, 20 such items per consignment won't need a licence if they are to be used for purposes such as R&D, testing, benchmarking, evaluation, repair and reexport, and product development.