The DGFT Notifications No. 23/2023 and No. 26/2023 proposing import restrictions on ICT products have raised concerns. Imposing these restrictions could disrupt supply chains, leading to shortages affecting consumers, students, startups, and the IT industry. Market distortions, price hikes, and hoarding may ensue, especially given the uncertain demand recovery due to COVID-19. India aims for export-led electronics growth, with government initiatives targeting a $300 billion domestic electronics manufacturing industry by 2026. These restrictions contradict this goal and may deter India’s efforts to become a major IT hardware exporter. AMCHAM proposes deferring import restrictions for at least a year after launching the IT Hardware PLI scheme to assess the situation holistically.

The proposed amendment to Section 65A of the Customs Tariff Act 1962, as outlined in the Finance Bill, 2023, posed a risk of withdrawal of the IGST exemptions on inputs imported by duty-free bonded warehouses meant for export production. This amendment could have far-reaching negative consequences, increasing the cost of doing business, impacting competitiveness, and discouraging manufacturers from scaling their operations in India. The electronics sector, in particular,  faced the risk of increased output costs and complicated refund mechanisms. Industry stakeholders urgently requested the continuation of IGST exemptions to support India’s manufacturing efforts and ensure ease of doing business.
On 11 Sept 2023, the Ministry of Electronics and Information Technology communicated that the Electronics and Semiconductor Manufacturing sector will be exempt from the application of section 65A of the customs Act as and when its subsection (1) is notified. This is as per decision taken by CBIC.

AMCHAM India has submitted an amendment request to Mr. Vipul Bansal, Joint Secretary, SEZ, Dept. of Commerce, Ministry of Commerce and Industry on October 20, 2022. The following points were highlighted: industry concerns about phased-out direct tax exemptions; and a request in the SEZ Rules, 2006 for optimal utilisation of existing SEZ infrastructure, which has already been created but is vacant to the tune of 30% on average