India’s Computer Import Restrictions Will Disrupt US Exporters, Trade Groups Say

New Indian import restrictions on computers and other electronics could “significantly disrupt” trade, including U.S. exports, eight industry groups wrote in a letter this week to U.S. Trade Representative Katherine Tai and Commerce Secretary Gina Raimondo. The groups -- representing the American semiconductor, electronics, manufacturing and retail industries -- asked the Biden administration to raise the issue with the Indian government “as a matter of urgency.”

The import restrictions, which were set to take effect earlier this month (see 2308030074) but were later delayed until Nov. 1, are a “major non-tariff barrier” to trade and will “create uncertainties and delays that burden imports, the groups said, adding they may also violate World Trade Organization rules. It’s “critically important that the United States uphold" international supply chain standards "to discourage the further expansion of trade restrictive measures in India and beyond.”

The trade groups said they expect the controls to affect India’s imports of products made by U.S. companies, including products manufactured in the U.S. They said one company recently “indicated” the new import license requirements “would inhibit their ability to export computers from the U.S. to India with pre-loaded software intended to facilitate manufacturing at multiple facilities" within the country. The measure “risks creating a major impediment for U.S. and allied businesses operating in or seeking to build or expand operations in India, by complicating their ability to reliably source products necessary to equip employees and run their operations.”

American firms’ “significant investment” in Indian data centers is also at “considerable risk," the letter said. “If the licensing requirements disrupt imports of servers, the data center investments are likely to suffer, which will also adversely impact India’s IT sector and all the Indian stakeholders that utilize this technology,” the trade groups said.

Although India is offering an import exemption for items that qualify as “essential components of capital goods,” including for certain services at data centers, the country needs to “provide more comprehensive clarifications and details regarding the scope of these exemptions,” the groups said. “This will promote continuity of India's manufacturing sector and provide greater certainty for U.S. investors and exporters.”

American businesses have “strongly supported” efforts to improve the relationship between the two countries, the letter said, pointing to recent dialogues on trade and emerging technologies as well as the June visit to Washington by Indian Prime Minister Narendra Modi, which resulted in the two sides ending five WTO disputes (see 2307190064).

But the groups warned that the restrictions raise concerns about India’s “reliability” as a trade partner. The potential for better trade ties “will only be achieved if businesses have assurance about a predictable regulatory climate,” the letter said. “India’s recent announcement, which was initially promulgated with immediate effect, undermines this shared objective.”

The administration should use “every available forum of engagement with the government of India to ensure” the measures are “consistent with India’s international trade obligations,” the groups said. They suggested launching a “stakeholder consultation” to solicit recommendations from industry and others.

A USTR spokesperson said the agency is "aware of the issue" and the letter is "currently under review." A Commerce spokesperson didn’t comment. The letter was signed by the Consumer Technology Association, the Information Technology Industry Council, the National Association of Manufacturers, the National Foreign Trade Council, the Retail Industry Leaders Association, the Semiconductor Industry Association, the Technology Trade Regulation Alliance and the U.S. Council for International Business.