Officials said FTA provisions won’t be violated as such non-tariff barriers are not negotiated in FTAs and India has cited security reasons for the latest measure. The country has not raised tariffs or imposed a ban but only said imports will require licences.
“Even FTA partners will get covered because we negotiated only tariffs in the pacts. The restrictions will apply to India’s FTA partners equally,” said an official. This assumes significance as India and China are part of the Asia Pacific Trade Agreement (APTA) while Singapore is a member of Asean (Association of Southeast Asian Nations), which grants them duty concessions.
India imported $1.2 billion of these goods in the April-May period against $8.8 billion in all of FY23 with China cornering over half the share at $5.1 billion, followed by goods worth $1.3 billion from Singapore. “The government may not give licences to companies it finds suspicious,” said a trade expert.
“Chinese companies could particularly face the heat as after banning Chinese apps, the government wants to crack down on hardware firms who threaten India’s security,” the expert said.
Two key product categories accounted for most of these imports in FY23 at $7.9 billion. The first included PCs, laptops and tablets, while the second comprised Wi-Fi dongles, smart card readers and Android TV.
Imports of such items may surge as companies build stock before the curbs take effect. The measure is expected to increase local production, but that may take time, experts said. According to the India Cellular and Electronics Association (ICEA) lobby group, local production stood at $3.4 billion in 2022. “We expect a surge in imports of these two categories in the next few months, even from passengers coming from abroad,” said the official.
