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Original URL: https://www.theregister.com/2024/03/22/us_lobbies_india_pc_license/

Vigorous US lobbying reportedly reversed India PC import license scheme

Washington was most displeased and New Delhi knew it made a mistake

By Laura Dobberstein

Posted in Personal Tech, 22nd March 2024 05:46 GMT

India was subjected to intense US lobbying after suddenly imposing a requirement that computer importers obtain a license, according to a news report on Thursday.

India's regulation was announced in August 2023 without any warning and covered laptops, tablets, personal computers, and servers.

Samsung and Apple halted shipments. Then the government paused the requirement.

Trade orgs quickly sought the sympathies of high-level officials like US secretary of commerce Gina Raimondo and trade ambassador Katherine Tai, and argued that the policy violated World Trade Organization (WTO) commitments and "could significantly disrupt trade, hamper efforts to more closely integrate India into global supply chains, and harm businesses and consumers in both countries."

A Canalys report on Thursday revealed India's desktop shipments increased 27 percent year-on-year to 884,000 in Q4 2023, despite the overall PC market (desktop, notebooks and tablets combined) growing only 4 percent to 4.3 million units.

Of the three categories, tablets did see a decline - 9 percent to 1.1 million units. However, a "strong rebound" is expected in 2024 with all three form factors predicted to have "robust growth." Tablets, in particular, are projected to grow by 24 percent year-on-year.

"At the tail end of 2023, India's PC market faced high inventory levels in the channel, driven by a supply push due to fears of import restrictions," according to Canalys Analyst Ashweej Aithal.

"With the government subsequently easing these restrictions, vendors focused primarily on inventory correction," he added.

Eventually Sunil Barthwal, secretary in the Indian ministry of commerce, exempted laptops and promised to revise the scheme to reflect an intention to monitor imports - not make them harder to achieve.

But according to emails reviewed by Reuters, the powers that be in Washington were not happy with the initial mandate, and embarked on a fairly aggressive lobbying campaign to unwind it.

Shortly after the trade letter was released, Tai reportedly met Indian commerce minister Piyush Goyal and expressed the US desire to have the policy rescinded.

Her talking points, on documents related to the meeting, reportedly included how India's sudden changes to policy made US orgs hesitant to engage in future.

Meanwhile a new Delhi-based US trade diplomat reportedly confided in his colleagues at the Office of the United States Trade Representative (USTR) that India's IT ministry understood that the country had "screwed up" and was being "hammered" by American companies.

According to emails from State Department official Timothy Wiley to colleagues, the moves were seen as "highly protectionist" and "out of sync" with India's trade progress.

Indian government officials were advised to stick to the official line:

The (Indian) government has the right, and the responsibility, to design a trade policy that is responsive to the needs of the people of India.

Wiley's emails also reveal that some US companies that had lobbied inside their organizations for greater manufacturing presence in India were "embarrassed by this unexpected measure."

Indian officials told Reuters New Delhi did not reverse the policy due to US pressure, but rather realized local manufacturing of laptops and tablets was not significant at this stage and the policy was therefore harmful.

Whatever the final straw that caused the reversal, it's clear that the USTR deeply disapproved and took action to have it changed. (r)


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