Make In India Push: Govt Targets To Raise Local Sourcing of IT Parts To $20 Billion

The government is going to “severely restrict” imports of parts worth billions of dollars from China for IT hardware as part of ‘trust sources’ norms, according to a Times of India report quoting sources. It added that the Centre eyes a significant surge in local sourcing of components for laptops and servers at around $20 billion in the next 4 years against $1 billion now.

“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,” TOI quoted one of the sources as saying.

It also quoted the source as saying, “The government is certainly not happy with the heavy dependence on China, and does not find the current ecosystem of component sourcing healthy.”

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 reflects 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.

The over-dependence on a single country, particularly China, for critical components poses risks to supply chains and national security.

Currently, India sourced about 10 per cent of the IT hardware supply chain, accounting for around $1 billion within the total industry size estimated to be $8-10 billion.

Last month, in order to promote domestic manufacturing, the government on also imposed import restrictions on laptops, tablets, all-in-one personal computers, ultra-small form factor computers, and servers with immediate effect.

In its notification, the Directorate General of Foreign Trade (DGFT) had said exemption from import licensing is provided up to 20 items per consignment for R&D, testing, benchmarking and evaluation, repair and return and product development purposes.

“Import of laptops, tablets, all-in-one personal computers, and ultra-small form factor computers, servers…is ‘Restricted’ with immediate effect,” it said. The DGFT is an arm of the commerce and industry ministry which deals with exports and imports in the country.